If there is softness in the coming 2-5 years, I would need to be ok with having a mortgage under water.

In the bay area, you are lucky if you can break even from rents, most likely you will be underwater hoping that property values and rents appreciate enough for you to make a profit.

After 5 years, they ask for full financials on you and the property and they typically do a property valuation (usually not a full appraisal, unless the asset is potentially underwater).

Sadly my prayers have been answered... only a matter of Time before massive walk a ways from underwater mortgages.

I suppose if you were that underwater they might seek to obtain a judgement against you...That should be part of the reason for investment conventional loans to require 20% down...  

Some will be led blindly and sign up for the 40k deals. some will just buy from turn key and never do any due diligence only to be totally underwater after a few years or have lost all their money..

Out of three suites, there are two vacancies, and it's underwater, but will be cash flowing when I get my next tenant in there, even with a reduced rent.

When they are underwater and foreclose like has happened before in my area, I’ll purchase from their banks with leverage then. 

There are 1-year extensions available but the property doesn’t meet the extension covenants due to underwater DSCR and debt yield.  

I'm pretty handy and can do quite a lot of DIY projects.I would love to own some rental properties and do some flipping but I'm currently under water with my first home and I have no capital to get started with.