So, we look for a product that will attract those tenants, and we work hard to produce that during a rehab.For us, the financial independence and wealth building aspect of real estate is the primary motivator. 

Real Estate takes time when it comes to producing great deals.

To us, we knew we could get the rent to cover the mortgage payment, so even if it ended up being worth less it was still an income producing asset.

But I learned from the error of my ways and have been fortunate enough that my greed for quick money has not bankrupted me and my real estate has been producing.

Once you have strong credibility and have put proper legal structures in place for deals, you can expand that.If I had a close friend with experience managing, rehabbing, and producing income from multi-families in Pittsburgh, it wouldn't take much more convincing than that.

Before paying the 1%, the client wants to 1) funds will be placed in escrow until closing; or 2) lender produces proof of funds when the commitment letter comes in.The lender has stated to the client that they do not use escrow companies so option (1) is out, leaving obtaining POF upon issuing the commitment letter. 

I would not pay off the 3 unit early if it has conventional financing and I would definitely have a plan on how to leverage the additional equity to produce a good return for the associated risk. 

How much "income" do you expect to produce with this rental home?

@Derek Morrison higher cap is better when you are buying, as it means that comparing to the price you are paying the property would produce more cash flow to the owner. 

The demand for income property investments and income producing rentals is massive.