I was under the same assumption for a secondary residence (10% DP), but was on a call with a credit union last week and came across a 0% DP option for secondary (Non-VA).

You are making assumptions that only people with bad credit who can't get bank financing would buy on terms or that greedy sellers looking for a sucker would sell on terms.

The general assumption for me anyway is that a single property will provide XX in income, XX in tax deductions, XX in mortgage paydown etc.

Bad assumption. 

You mentioned STRs--STRs are illegal in many parts of SLC (but I don't know about their status in Provo), and it's probably pretty likely that most apartment complexes have anti-STR arbitrage clauses in their leases (though, that's just an assumption).I'd suggest connecting with an experienced investor-friendly agent who knows the market, and also a good mortgage broker who can advise you on your financing options (I work with an excellent agent & mortgage broker in SLC--DM me if you'd like their contact info).IMO, house hacking is the best way for new investors to get their start for a long list of reasons.

So my question is should I be building a proforma on the assumptions I listed or from what the market seems to be indicating based on cursory view.

I am under the assumption a refinance can only happen with no liens on the property.  

I believe it is a false assumption that there is malice intended, or a lack of confidence in a deal.Every person has a different risk tolerance, need & definition of what works for them is. 

Then, echoing what Spencer mentioned, making this assumption also only makes sense if you are self managing with no experience.  

I agree with you that people should not be rewarded for bad choices but you make the assumption that people needing help make bad choices.