Even if the rental has a decent cash flow with additional flood insurance, we're still not sure we want to take on that risk as we are out-of-state investors (planning to move back to KY in the future, but not now) and we don't like that it will potentially bring down the perceived value when we try to sell it in the future.The seller has never lived there and has not provided any information on if it has flooded before or not. 

The returns that investors require is generally based on their perceived risk of the project and the investment period.With my CFO clients who do real estate development, most LPs in the small-scale residential space (SFR & 2-4 MF) are investing for 3-5 years and are looking for a preferred return of 8% with an IRR of 16%-18% for turn-key and 18%-24% for value add.

.: Quote from @Travis Biziorek: Hey Amit,Section 8 is definitely appealing to a lot of out-of-state investors because of the perceived stability of government-backed rental payments.

Anything the u/w can perceive as "variable income", even if its a shift-differential like nurses or firemen...

In fact there are quite a few sellers who will opt to go with a different buyer solely because they don't want to deal with the perceived headaches of a VA buyer underwriting process.

Any "perceived" deception at any point, will be severely counted against you by the court.

This can also be triggered if they have kids or what they perceive to be valuables in the home that have not been secured.It can also relate to how you conduct the inspection.

Instead, create perceived value by using strike-through pricing and strategic discounts.

The terms may be more favorable, if you are just starting out a bank maybe nervous to do 3 at once, therefore their perceived risk will likely be reflected in less favorable terms.     

My only concern to look out for is that things can go 'rural' pretty quickly if you start venturing outside of town, and most lenders are going to put the brakes on financing if the appraisal lists the property as 'rural' (has to do with what they perceive as the availability of future tenants).Watertown, NY - It probably is as good as you believe, but the lending licensing is pretty tricky up there, so its just  bit more difficult to find lenders that operate up there.