I also used my VA loan, so I only had to pay closing costs of about $3.5k.Unfortunately, this area was in what’s called a “Mela-roos tax” zone for roads/neighborhood upkeep which added an extra $350/month to my PITI.Therefore, my total payments were $1600/month.When I moved in the summer of 2012, it looked like mortgage rates had sunken to about as low as they would go (I was wrong, they dropped another .75 basis points…but who can time the market).I decided that I would refinance to get a lower monthly payment.For $2k, I was able to reduce my monthly payments by $230.Add this to the fact that real estate prices were rising fast (my Ohio property was now worth about $95k and the one in California was at about $240K!).

anything going wrong could put me in the red...How sad is that?  

I agree with the previous post that the lighting is in the grey zone if you have to rewire the electrical.

Therefore, we saw the property and liked it, so I ran deeper numbers on it without listening to the original red flags.

Here red the issues that I see:1) Is this a CA conservatorship?

i would not say war zone but I would not live there with my family.

My Realtor is concerned that the cash is not in my name and that if we provide a bank statement from the lender it will raise a red flag with Fannie due to the lender's name not being on the deed.  

the wholesaler said that i wouldnt be able to see the lease agreement until i decide to buy the house..... red flag??

Check and see what the house is zoned for.  

The real bad areas are often called war zones.