Years ago I had a guy call for a refinance on his house he bought it or 500k and put 200k into his back yard and interior so when I asked how much it was worth he said $700k, I explaned that's not how it works the appraisal come in at 560k...Hard money some let you go off "ARV" after repair value but the rates reflect the leniency.

That needs to be looked into but if there is a reasonable explanation, their income is good and they have a good rental history I would rent to them.

The vast majority of the clients I work with chose our firm over their previous agent simply because they had never gotten a proper explanation of their coverage and policy. 

So it just depends on which loan type works best for you.I hope this explanation helps in some way. 

If I come in low like that, my appraisal is iron clad, extra comps and explanation.

Also geographic area plays a role.An "all-in" property manager is going to cost ~10 to 12% of gross rents which @David de Luna pointed out.

I agree with all and particularly Nathan...a factual, detailed written explanation of why you have not received rental proceeds is essential. 

The worst case situation would be a natural disaster in your geographic area, but if the odds are low on that (hurricane, tornado, flood, fire) then the risk may be worth the pay out.

Did he provide a more detailed explanation of the issue? 

Thank you for that explanation.