I am more motivated now and have been hanging out and learning the game from some seasoned veterans.

The seller was very motivated yet had done nothing to market the house: no Craigslist ad, no Zillow, nothing. 

If you're not living rent free, I would find a way to temporarily get into one of my properties, or stay with friends/family till you get on your feet.Use this as the motivation you need to get out there and find another job.

Can't hate him for that - just move on and find someone motivated, or make him an offer of what you want to pay and be prepared to walk away.

They may become more motivated ... and creative as time passes with no better offers.

My motivation is to network with more investors in my local area.

Does anybody use this strategy of buying and holding deals they've found through motivated sellers or direct mail campaigns?

203k is appealing and can make magic happen, but in hot markets (LA in the summer...) the house and the situation of the seller really needs to be a perfect match.In general you don't go find a house to 203k, you go look for any old house, coincidentally find a house that happens to coincidentally be a perfect fit for 203k, and then you start talking about 203k stuff.Typical characteristics:Too crummy for cosmetic flipper types to want.Seller more motivated by sales price than by closing quickly. 

I belive  that there must be an incentive to do better, so in the next project both of us will be motivated to do better in the next project.  

Visit the houses of expired listings - an expired listing is a listing gone wrong - owners still have an unsold house, sellers could still be motivated to sell.