But the reality is that many properties got slapped by liens like that because the municipality could do nothing else.  

Is this a reality I have to accept? 

But as reality sets in, I probably can't swing both financially at the same time. 

Finding the right lender and real estate agent really helped making this come to reality. 

In reality, you're still not in too much of a worse position than you placed yourself in, because after all, it hasn't been coming out of your pocket (so far).The question remains: do you still have any equity left in the property?

When we first started, we toyed with doing C-tier rentals but quickly abandoned it because the reality is so much different from what looks like amazing 'government guaranteed' cash flow on paper.

The reality is tax liens are sold at auctions.

You are required to hire a 203k consultant which in theory should be beneficial but in reality it is alot of handholding and red tape.

You are just giving a chance for someone in thier life to provide them a reality check.

Leverage increases your returns in most cases to 10%+ when properly done.In reality for every dollar of dead equity you are losing 10% - 4% = 6% lost income.