I’d negotiate hard for the right price on this one, and be ready to walk if the seller is unreasonable as there are likely some additional issues hiding in the walls that you haven’t uncovered yet.

What are the biggest flaws in this strategy?

They understand construction and will often find flaws where a sub is cutting corners before it is too late.  

However, these types of properties can go wrong in a hurry as there oftentimes structural issues that aren't uncovered until later.

Do you see what I’m envisioning or could this method be flawed in your opinion?

One easy way around this flaw, is to select the area you are trying to find comps for and click the option for sold properties.

With the goal of getting lucky and uncovering a motivated seller, etc. 

I leave mine uncovered. 

Review tenant screening prcedure with a view to uncover what went so horribly wrong this time. 

Many of my rentals, are ones that have flaws in it from an owner occupant standpoint, but dont matter as much to renters.