It's the same as someone's electrical wiring in their upstairs wall sparking and burning the building down. 

I’ve gotten burned badly on two partnerships that I didn’t have agreements on, the first ended up in an expensive court case.

I spent a lot of money on mine and have adjusted it each time something else happened where I either got "burned" or to stop something  from happening again in the future (it "grew" from 4 pages to 6 pages in length).

I think the lessons of '07 have been burned into people's minds and they are more cautious and conservative. 

I believe that historical testing will prove the 4% rule, depending on when you begin pulling money out (ie: if you formed your portfolio and in 1929 and began pulling the 4% in that year, you got burned, but if you stared in the 19teens, you were fine.- I partially agree/slightly disagree with your discussion of owning.  

That means if you turn on an AC in a room and then turn on something else in that room, you might burn down the house.I had to get the electrical permit - $800 and do a proper electrical wiring on the outside of the house from the main panel, another $6200.

If you exercise your option (at $85K in your example) and then turn around and sell for $100K, you'll burn up something like $11K in commissions, closing costs, and seller concessions.

This will typically produce impressive yields, so long as you can keep the criminals from burning your units to the ground.Lastly, homes in this type of market are not $100K or $50K.

If you choose to not get the house inspected, or if you choose to have your brother the handy man to inspect it and you get burned, whose fault is it if the house turns into a money pit the day after close?

@Lee Taylor and @Brice Burns new investor/wholesaler here.