Unfortunately, that is true for a lot of CPAs.

Find out from a foundation and drainage expert the true cost and buy the property accordingly.However, keep in mind this is a project in itself. 

@Avery Heilbron  It is true that you can not get rid of the PMI even at the 20%. 

This is true even when house hacking.The LTV combined with the conservative refinance appraisal places challenges on extracting all of your initial investment. 

It is very far from perfect here, it is a difficult business and you have to know what you are doing - I think that is true in any city and I can not imagine taking on getting to know another big city at the level my company has learned Philly.

If he had blindly trusted us, he could have bought a house with true structural issues based on everyone here saying "sounds like no big deal."

I don't even hear the nicknames "Methmont" or "Stabmont" being used much anymore ;) Not to be a stickler but I wouldn't really call it "outside Denver" as it's 45 minutes away and a distinct town from the metro, not a true burb like Arvada, Westminster, Lakewood, Littleton, Centennial, Highlands Ranch, Aurora, Greenwood Village, Commerce City, Northglenn, Englewood, Glendale, Thornton etc.etc.etc....

I suspect all of this is generally true of all pure tax lien states.

As true as this statement is, I've found the opposite to be true more often. 

To be safe, allocate 20-25% against the gross income for both properties and then use the remaining numbers as the true NOI.