I suppose the things you mention could happen, but many of the 'things you put in the contract' are put there because one bad thing happened a couple years back and the attorney recommends it to prevent that bad thing from losing you money.

I could rehab them with a line of credit then sell them above the release price to prevent paying at closing. 

So I strongly recommend that your rental have its own bank account.As for worries about the mortgage bouncing - the only way to prevent that is to fund the rental property's account up-front with some reserve capital.

It seems these tenants may be incapable of supervising or training their dogs in the fenced backyard to prevent this from happening.

Surely a card system would prevent drilling the locks and stealing the coins?

It will save you a lot of stress/prevent issues from spiraling. 

However, the parents and/or Realtor should be close enough to prevent things from getting out of hand. 

Be prepared to answer a lot of tough questions about the risks and the process in general.On the plus side, having to pay cash and be at the auction in person usually roots out the "know nothing" buyers that drive prices up.

Gutsy move @Douglas Gratz and I'm rooting for your big win, creek don't rise, this insane market holds, and longshoremenandwomen start working 24/7 to ship you parts.

@Benjamin Aaker is on the money.Your income probably prevents you from using RE to offset your W2 income but you can still use deductions and depreciation to offset rental income.If you are looking to REI to reduce your taxable income on your W2 earnings REI won’t help much at all.One needs to be precise when discussing tax law.