(first look period).You should have a understanding of what buildings will and will not qualify for conventional financing, of course the best deals don't qualify.Take your time and look at many properties,Solid buildings that mostly need cosmetics are your best bet.

Property manager (if you have one), periodic vacancies, any common area utilities, trash, misc fixes, reserves, etc. will suck up a lot of the rest.

If they had inspected the home periodically they would have caught it earlier or deterred it.

Have you or any property managers you know heard of the Government not paying rent for the days during the shutdown period?

I have a commercial mortgage through them that in fine print said something about possibly changing interest rate after 5 years even though it's a "fixed" loan.I asked about this and I remember them saying that they remind you of that time period coming up and you can usually talk to them about keeping the rate the same.

@Will Barnard Thanks again.One more question: If I structured this so it can cash flow, would I be looking to refinance with a conventional loan after a certain period?

There is no redemption period for the owner since they had 3 years to bring the taxes current.Here is a very high level summary for Washington: http://www.ehow.com/list_6510687_washington-state-tax-lien-laws.html

With most closing periods between 60-90 days, that is plenty of time to line up a tenant.

If you are going to do several short term deals in that period then it may make sense.A portfolio lender, such as a small community bank, might lend against the equity.

(B) Gain allocated to periods of nonqualified useFor purposes of subparagraph (A), gain shall be allocated to periods of nonqualified use based on the ratio which—(i) the aggregate periods of nonqualified use during the period such property was owned by the taxpayer, bears to(ii) the period such property was owned by the taxpayer.