The strategy is best described in Joel Greenblatt's fantastic book, and an outstanding practical guide and tool for executing it can be found over at the Magic Diligence website.You can do either (or both) of those using the "leverage" of Options, allowing for substantial upside potential compared to standard stock purchases, with dramatically reduced downside (if you want a no-hype education on Options, Erik Kobayashi-Solomon's book is great).Those with the patience and inclination can indeed use Option trading to make money in any market condition (Wikipedia founder Jimbo Wales, Amazon's Jeff Bezos, and "Black Swan" author Nassim Taleb all spent time -- and made lots and lots of money -- as options traders in their careers).For even more leverage, you could of course do any of the above (and much more) on margin (meaning your brokerage lends you money to do the investment), though that's not something I would ever do personally.Also, if you focus on holding stocks (or options) for at least a year, you benefit from favorable tax treatment of the profits.

Assuming that the due diligence checks out; paper trail is good, and it's worth substantially more than the outstanding balance and the payment history is as stated,  then you might have a good one here. 

This is what we look for regarding credit history.FINANCIAL/CREDIT HISTORY1.No outstanding debt to previous rental property owners.2.No outstanding debt to utility companies.3.No outstanding debt in excess of $1000 that is not in a payment plan.4.No excessive monthly financial obligations - more than 20% of income.5.Lack of credit history or marginal credit history may result in additional security deposit. 6.Derogatory credit (past due accounts, collections, charge off accounts, tax liens, judgements in excess of $1000 and/or bankruptcy) may result in additional security deposit or denial.

I work a full time job as a Fleet Manager and like the idea of passive income coming in month after month rather I'm working or not.

Update: the tenant paid $3000.00 of what is owed (the max allowed to be e transfered in 24 hours) the sheriff is still going today to post the eviction notice the outstanding balance is $570.00 It's a start, we did accept the $3000.00 as the landlord tenant board suggested.

Also, while the property is in outstanding conditions, only need new paint and carpet needed, monthly rent will cover the mortgage itself, very little ($25) as positive cash flow.

For simplicity sake, say I loan 10,000 to a borrower. What total return should I expect, realistic and Best Case?And what term lengths?What have you experienced?

So your total LTV is the sum of all of the property values divided by outstanding balance of the line.

You are looking for patterns in the payment history, any collections, evictions and outstand debt. 

It's like a credit card/bank account where you use the money and only pay interest on the outstanding balance.