They don’t have a desire to reinvest so the passive payment every month at a decent interest rate is appealing to them. 

Other perks include the ability to vest title in a LLC (if desired), the fact that there are no caps on the number of rentals owned, and the fact that these loans servicing companies don't report to the credit bureaus.  

For example, if you are looking to connect with other members near you, want to learn from people in a specific area you’d like to invest in, or have a desire to find people interested in certain topics, you could use the search feature here: https://www.biggerpockets.com/search/usersI really like the alerts feature that can quickly guide you to current topics that may be of interest: http://www.biggerpockets.com/alerts

You don't get taxed when you take out the money as you pay taxes on the net income when earned.  

All of the rest haven't reached a point where they have a desire to change their current state (and in the case of the mentally ill, they should be in institutions anyway). 

@Bob WilsonI would like to know more about how 35k can earn me that type of cash flow.

Time to put your hard-earned RE investment dollars to work where your assets to society will be appreciated. 

You most certainly could be able to generate other streams of income from sales and leasing if you so desired.

FHA loans do have value and there are always exceptions,  but In most cases FHA is a less desirable financing option than conventional.  

You can see if the owner is willing to hold off for 6-12 months while you hustle to earn the money and then buy it.Personally, I don't suggest you borrow your way to wealth.