I would say it can work out well as long as you can afford to pay the mortgage/expenses if it is not occupied.

I did a Phase 1 on my apartments even though it wasn't required by the lender for the exact reason you said - the protection it affords; figured I would throw it out there since this is undeveloped land and get feedback on whether it makes sense or not.  

@Jeffrey Daniels By reasonable I mean something I could probably afford, i.e.

I live in So Cal and can't afford anything reasonable so  I'm looking to invest in Vegas.Here's my question:I've been looking at condos and townhomes in the 150-200K price range.Should I use the SBA 64K as a down on a SFH as a rental property and finance the rest? 

If your market is too expensive dont be afraid to drive a few hours to a markert more affordable for your investment property.

You will have a lot of people who want a place they can't afford, but there are just enough who do qualify, and have sufficient income, so it will be fully occupied without any problems.

Affordable homes in the Austin area are harder and harder to come by.

Yikes, $50K would be a severe restriction if buying all cash.However...Have you considered having your Chinese buyers employ leverage afforded by either seller financing or private lenders to acquire properties?

Class B, is affordable and is very recession resistant in the right areas. 

If people can't pay rent, how can you make money/afford a loan assuming you don't pay cash?