The rest were Reg D 506 (b) that allowed up to 35 sophisticated investors, but required a substantive pre-existing relationship with the sponsor. 

If you collected an insurance claim you would only be able to collect your out of pocket (ie deductible).

Usually, this would be in the form of a rent roll and contains everything related to your property related to vacancy, rent collected, expenses, fees, etc.

Also, focus on 2 years of job/income stability.Class D Properties:Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciationVacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions.

do I now Request for Tenancy Approval (RTA) form so HUD could come inspect the property and starting collecting rent (assuming inspection is passed)?

And collect income, pay bills etc.  

Monthly payment $1256total note collection remaining $139,416.

We will lose out on $100k but get our cash out and the new investor will clear $100k by sitting on a deal for a year (while collecting rents).Does this seem feasible or something that would be attractive to an investor?

Also, focus on 2 years of job/income stability.Class D Properties:Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciationVacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions.

If tenants are moving out right after closing, do double check the leases clearly show the security deposit they paid the seller and you collect that amount at closing from the seller (credit to you) so you have those funds to then return to the tenants when they vacant under your ownership.