This home also has a garage that is blocked off and turned into a bar.

Example: LOT 4 AND THE SOUTHEASTERLY 2 FEET OF LOT 5 BLOCK 0 CAPRI ISLE BLOCKS L M N O ????

There are so many empty lots, whole blocks even that cost $4000 or less.

It seems like a solid basic house : slab, block walls, single story, post-lead paint construction, and town water (wells are a Pita).

I imagine the loan amount is what is causing you initial stumbling blocks. $50K is the minimum criteria on the lower side with most lenders.

Owner's sister used to live a few blocks away but moved to Cincy. 

I also have one similar property with light rehab two blocks down that rents for $1600 a month.

I missed out on a duplex in Del City that was a couple of blocks from the base just last month. 

I tried to do background screening and because they told all the credit bureaus to block everything due to compromised personal information during the disaster I can't get any credit report or other screening information.

Lenders are so efficient it is on the auction block where buyers have to pay 5% hammer fee to the firm and bank to acquire a property at market price.