In your experience, does this eliminate lot of competition and increase scope to bring down the offer price?

In trying to get this to be a passive investment I do everything I can do eliminate unwarranted hassles. 

I'm moving from San Francisco - so Denver may be hot but at least I have the chance to purchase in the area which is exciting.My current plan is to use FHA to move into a rehab/ready move in for a house hack to eliminate my housing expense and hopefully get a little cashflow.

Eliminate the tax slowly - yes eliminate it! 

You would also eliminate the design constraints of working with the existing structure.

I negotiate an equity split after i reinstate the loan eliminating the foreclosure, help them transition with a portion of their profits up front, and pay them either cash upfront to walk or a percentage of the profit after I rehab the property.

In Chicago, there are management companies that focus exclusively on subsidized housing since it eliminates the rent collection issues, and this could be an interesting play in SB. 

the tax benefits of eliminating state tax can be monstrous.And @Bill Brandt only thought he was kidding! 

Psychologically, studies show, paying down the balances that you can pay off more quickly in most people's cases actually lead to quicker debt elimination.  

They believed they had found a way to eliminate financial market risk and became high leveraged, borrowing $40 for ever $1 of capital (meaning if the market value of their holdings declined 2.5%, they were bankrupt).