In fact my written policies and procedures show down payment as the number one factor in who gets in and who doesn’t.

Theres no rule that "3" is going to produce anything other than quality.Keep looking!

In California cities can now fine REO properties 1,000/day per code violation for unsafe and substandard houses.I am working with private and public entities here to implement the compliance procedures and the lenders handling our local properties are becoming very cooperative.

TLC is producing a show "Flippers in Trouble" it will follow flippers as they to buy REO's in California , rehab and try (unsucessfully) to resell.

Apply the 50% rule, and you'll see that a higher priced property with correspondingly higher rent will produce the same $100/month at a lower percentage.Very tough to find one that will produce $700/month in real cash flow after realistic expenses.

Without proper screening procedures, you can find yourself stuck with potentially nightmare tenants.

I want a "farm" that keeps producing not a brokerage where I have to keep chasing deals.

This way you are walking into a property that is producing enough income off the abt to pay the interest on the HML while you seek out permenent financing.

People stop buying and the producers suffer.

Klyde, You should think of tax benefits of owning an income producing property as a bonus, NOT a reason to get involved.