It is D class building in D neighborhood with high rental demand.

Does anybody use this strategy of buying and holding deals they've found through motivated sellers or direct mail campaigns?

203k is appealing and can make magic happen, but in hot markets (LA in the summer...) the house and the situation of the seller really needs to be a perfect match.In general you don't go find a house to 203k, you go look for any old house, coincidentally find a house that happens to coincidentally be a perfect fit for 203k, and then you start talking about 203k stuff.Typical characteristics:Too crummy for cosmetic flipper types to want.Seller more motivated by sales price than by closing quickly. 

Its a business negotiation , nothing is written in stone . but its the law of supply and demand . if everybody is busy , you will pay more , slow , you have more negotiating power .  

I got the sellers to agree to write me a check at closing for 21k for some repairs.

That's why it's best to get seller credit for closing.

I don't know if you are licensed and You can become part of future litigation by a seller if they felt that you misrepresented the house that they just purchased.

Numbers are good but want to understand what I need in place before I sign the sales agreement of what I need from the sellers along with do I rewrite the land contracts?  

I don't think it will be a deal killer but the sellers will have to pay for treatment.

utf8=%E2%9C%93&term=parrish+postTry this – The 50 House Rule - Use the 50 house rule - look at 50 houses in the community where you want to invest Do not make offers - look at and tour as many houses as you can - 3-5 per day Keep a journal - keep notes of what the sellers and the agents tells you - determine the price per S.F. - this will give you an indicator and a comparison of prices in your marketing area.