ROI is lower with cash. 

If there was no out-of-state money, housing prices would be lower in many of these markets.

The general rule is that the more passive the investment, the lower the return.

I know that banks want to see reported taxable income and I don’t want to cause any red flags or have IRS get involved.

I am thinking in terms of maximizing my taxable writeoffs. 

He is going to pay 10% for 6 months so that he can get a lower rate after he pays 3k or 4k in fees AND closing costs and then pay all the fees and closing costs again in 6 months??

This means you must lower your standards even for a C class property.

Organic loss to lease would be any losses in potential rent due to the natural lease up cycle, meaning if rents are growing in the market, then leases dating back 11 months ago would be renting at a lower rate than market but this doesn’t necessarily mean the property has under market rents and a strong opportunity to increase rents.

if you're doing a cash out refi you're looking at 75% LTV so you should be able to pull out $63K if you wait 6 months seasoning and since it's a refi your costs should be much lower.

In the most basic terms, the pros have experience renting out properties and vetting tenants, handling repairs etc. and take all of that off your plate, with the con being that this costs money thus lowering your return.