Potential solutions include federally backed loans with lower rates or tax incentives to help offset the cost of a new mortgage, encouraging these homeowners to sell to new owner-occupants.

I’m estimating renovation costs at around $150,000.

Yep, off water, but with nearby water access and view seems to be the same ROI considering the cost of the property. 

Trying to get a # from him about estimated remaining cost but got nothing.   

FlooringScope of Work:Replace carpet in bedrooms with engineered hardwoodRefinish existing hardwood floors in common areasInstall durable tile in wet areas (bathrooms, laundry room)Estimated Cost: $20,0004.

The cleaning costs alone were over $9k.

Platforms like Avail can help if you prefer to self-manage but still require time for repairs.Tax-wise, repair costs may be deductible immediately, while major improvements must be depreciated over 27.5 years.

Here are a few to watch out for:Property Condition: Most distressed properties need extensive repairs or renovations, which add to your initial investment.Competitive Market: With Phoenix's popularity among investors, competition for the best deals can be intense.Complex Deals: Foreclosures, auctions, or short sales are much more complicated compared to regular real estate transactions and usually require specialized knowledge.Tips to Successfully Navigate the MarketDo Your Research: Understand the local market conditions, including neighborhood trends, property values, and potential rental income.Build a Strong Network: Work with professionals who specialize in distressed properties-such as brokers, contractors, and legal experts-to make the best decisions.Assess Costs Carefully: Factor in the cost of repairs, holding costs, and any potential financing issues when evaluating a property’s profitability.Be Patient: Finding the right distressed property takes time.

There were a lot of costs that we didn't expect like the plumbing had to be completely redone.

Taxes, costs, eviction complexity, etc are going to be a much bigger factor in your success than anything else.