My cash safety margin was also too thin to support huge rehab costs with large uncertainty.

You will be doing electrical and plumbing and you’ll need to meet egress and fire / safety requirements.

Most of the people I’ve worked with find some middle ground, keep some cash for safety, reduce non-income debt and allocate some to investing.  

Foreclosing ASAP is a way to get in front of that mathematical "certainty" and cut my losses.By contrast if 4% is a normal interest rate and 8% is "normal" annual appreciation, equity (ie, the safety of my position) is actually still going up each year.

If they are in foreclosure at the time you buy the property, that business model is against the law.

I believe the 6 mo rent cash reserve is a good safety net.

What model?I

In general, you can choose to address all of the major/critical items that involve safety and/or potential code violations.   

Whatever the case, I agree that safety wise it's not a good idea to enter an occupied house plus I wouldn't want to put us in a position where anyone could accuse us of theft. 

You can't report tenants without some legitimate concern for the safety of them or others.