So a while ago I heard James Wood speaking, and he mentioned a strategy that involved finding houses with loans that originated with now-bankrupt banks.

If they are basically heading toward bankrupt then they have a better chance. 

What if one goes bankrupt?

A job that gives you close access to divorce or bankrupt attorneys would also be beneficial in finding deals. 

If a lawsuit is filed the insurance steps in or the company which owns nothing is bankrupted and you are out the start up costs only.Your business entity should lease from each land trust with a right to sublet.A series or bucket LLC in Illinois will end up serving a plaintiff attorney with a hunting license.

It can make you rich, but it can bankrupt you even faster.

On top of that, the condo association (very small, 6 units only) is a disaster and is nearly bankrupt, the shared space (i.e. yard, parking lot) are in terrible shape, and the current association officers won't take steps to collect against past due association fee owners. 

I mean if we are going to go bankrupt let’s do it UP right!

Time to study Economics and pay very close attention to it.To emphasis this point, think of a scenario where if you didn't follow the economics, things would have turned out VERY bad.Take Investing in Detroit before it went bankrupt.10 to 20 years before Detroit went Bankrupt, there were very clear economic signs that domestic autos were in trouble.

It feels like stealing...https://www.zerohedge.com/news/2018-07-31/bankrupt-philadelphia-plunders-its-property-owners-cash