If the permanent financing will allow you to recover most of your initial investment and the fair market rent covers the principal, interest taxes, and insurance with cash left over, you have a BRRRR.

This will help attract more business to the state, keep it coming! 

Usually the numbers don't work to build in these neighborhoods, unless government tax credits, etc.Do you see the problem with your two statements:"The turnover costs could/will be high"and"How much more damage could they do?"

It's in addition to this tax.

For the LTR outside CA, forming an LLC in the state where the property is located can reduce administrative costs and avoid double franchise taxes in California.

Give them a couple of options, they already know the unit got foreclosed, most people move to avoid the hassle. 

Avoid it until you get the investor ball rolling.  

It avoids having to pay the capital gains and lets the property keep appreciating while you still own it and reap those future rewards and more cash-flow from the property in the meantime.  

@Polat Caglayan we can answer all your questions, yet you avoid setting an appointment with us.Very interesting approach you choose...

This will also allow you to avoid taxes on the sale.