In the 2nd case, you just need to come up with that money before closing and there is no need to proof up prior to that event. 

Prior to signing any paper work, do you run title work like you would on any other conventional deal?  

To go on a slight tangent, say you decide to let the PM place the tenant... how soon prior to completed renovations do you get your PM over to take on the property so they can advertise it?

What happens if you declined a prior applicant with a 530 score but took one with a 500 score and similar background. 

With the low cash flow you don't have any room for error in your assumptions.How does the $3300/mo rent stack up to comparable units in the area? 

Here is my question to those who have experience in purchasing a property under these conditions - if a city performs an inspection prior to the house being listed and it fails, is an investor able to buy the property prior to repairs being performed with the understanding that these issues must be repaired so it can pass the inspection before selling it to an actual homeowner?

I would say the disadvantages as compared to conventional is that they usually won't be 30 year notes and you'll likely pay higher interest.

We dabbled in rentals when we were first married since we both owned our own homes prior to getting married and it was not a sellers market.

@Mitchell Litam - test for asbestos if it was installed prior to 1978. 

Though I always do provide utility estimates from prior years/tenants.