He has a couple of thousand dollars in student loan debt that is in default (no more than $5,000, so not a ton)... he is looking to go through the loan rehabilitation process in order to pay it off, to avoid further hurting his credit score. 

You can research on your MLS for investors, set your criteria to "rehabilitated" properties.

"Section 203(k) insurance enables homebuyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home." 

Plus don’t do any really old homes are the costs of rehabilitation are always double what you is budgeted budget.

You can not just start repairing plumbing, electric and core utilities depending on the level of improvements needed and have the rehabilitation folks still occupy the property.  

My name is Joey Ickes, I'm a new guy, entering the last semester of a Professional MBA from Texas A&M, looking to begin my Foreclosure Rehabilitation business in the Houston Area, excited to be a part of BP and get my business rolling.

If your plan is to acquire a {distressed} under-performing property, renovate/rehabilitate, bring it into performance, then pull out your forced appreciation to acquire another property, then, you should use a variable rate mortgage product as you will incur the least amount of penalty for refinancing (maybe none in certain scenarios).Consider a mixed fixed-term mortgage / HELoC product on one, or more, properties.

@Darrin Carey Well since I am new to the game, I am considering getting a job like construction rehabilitation to educate myself.

Property can be improved and rehabilitated by the property owner.  

I appreciate all those good comments, I will also investigate little Rock and Jacksonville.Curt, I had a look at your site, but I understood I had to buy before rehabilitation is completed.