Short Sale

tenant in place with good history of payment

I'd want to know their source of income, job history, if relevant, address history, credit score and prior landlord references if I were buying a specific tenant's future rent payments. Secondarily, I would want to know the health of the rental market in the area, current vacancy rates, and how much above or below market the current rent is.

Tenant in place is fairly irrelevant.

Short sales are a major PITA -- look for foreclosure instead. Look for signs of falling rents in area (e.g. unemployment). Look for signs that new overexpansion at city's edge won't implode the older areas, like for example where you're looking (think East L.A. when the started building out the San Fernando Valley and behind the Orange Curtain). Learn local eviction laws. Have really good tradespeople lined up, because houses headed for short/foreclosure sales tend to be neglected (roof, HVAC, etc.), and you won't be there to deal with problems. Go for good CAP Rate, not just positive cash flow: http://visulate.com/cgi-bin/invest.cgi

How will you find and evaluate future tenants? Has current tenant bee reliable only because someone's come by in person to collect rent? Is it the norm in the area to do credit/background checks on tenants, and collect considerable deposits, or is it so heavily a renter's market that you disqualify your condo by demanding those things?

If the property lends itself to bad credit tenants, then you need to buy at a low enough price (a higher cap rate) to pay for frequent evictions, non-payment issues, higher expenses from tenants trashing the place, vacancies, etc. If the place lends itself to more selective occupancy, then you can size up the tenants, no?

if short sale good, foreclosure gooder, geitner backstop with 15% guaranteed yield by taxpayers!, grand slam goodest.