However, the higher purchase price made it harder to find a buyer in that neighborhood, as they had trouble qualifying for the larger loan amount.

A 1.00+ DSCR is typically what you need to qualify and a 1.25+ will get you the best possible pricing. 

The payments to these programs likely do not qualify.

@Sam FaasTypically homes need major work and do not qualify for conventional financingAs noted they are typically overpriced.

A Qualified Intermediary (QI) is required to handle the funds and process.Selling “as is” can save you from repair costs but might lower the sale price. 

It sounds like you’re aiming to offset your W-2 income with potential real estate losses, which can be tricky if you don’t qualify as a Real Estate Professional.To qualify as a Real Estate Professional, you or your spouse need to spend more than 50% of your working hours and at least 750 hours annually on real estate activities.

Being self employed then too, I would not qualify so I never started that way (and I was very young (like 23).

You should consult with a qualified contractor to discuss options and costs for proper repairs.

How does one go about making an offer on a commercial space that is becoming vacant shortly, such that if I cannot find a qualified tenant to fill the vacancy that I can walk away from the deal? 

I am looking to purchase a property that falls under the minimum limit for DSCR but qualifies for a conventional loan.