@Van Lam I had a client just run into this recently.  

I’m struggling to understand why all of this is necessary just to use their property management software.

Quote from @Mike Sfera: This depends on the PM that you are speaking with when you reach out.

This is state by state as far as I have found.

I'd keep the rental and by no means refinance it to take cash out. 

I found that out myself a few years ago. 

While you did point out the negative aspects of a deal like this, you didn't really highlight the pros on the RE side and future investment, appreciation etc.I’ve done two of these projects in the past 3 years in SoCal.

@Jacqueline Wright  Every auction is different so the first items to check: do they allow financing if you win the auction? 

And before countering had a conversation to try to find out what's really behind the offers. 

If the insurance isn't done properly, it's on the edge of impossible to cash the check because it's made out to the lender, my company, and the seller(s).