The property was in the New York area, the investor was all but bankrupt at the time to boot so he couldn't really buy it anyway, but still he obsessed and everyone bet against him after finally giving up on trying to stop him.That investor was Donald Trump, and that deal, the impossible sure looser deal, is what brought him from the ashes, wrote books, made him famous, and launched the multi billion brand Trump.I would say the most dangerous thing in this world is a psychic pessimist; once computers in the home was impossible and now we carry them in our pockets, history is made by those who do the impossible, even in real estate. 

If that were someone's speciality they'd go bankrupt as their is not enough of the asset class to support a career in specializing in it.

Here is the link of a recent wholesaler turn bad while starting out http://www.biggerpockets.com/forums/12/topics/380162-went-bankrupt-trying-to-wholesale-heres-my-sage-advice

Many people in 2006 got over leveraged and when the economy and housing market got in trouble they got into financial trouble and got their homes foreclosed on, went bankrupt, etc.

Are they in fact bankrupt?

This should boost your credit score way high because again, you are competing with others who have gone bankrupt.

Now, all we have to hope is that country would not be bankrupt when retirement time comes...

What are the negatives associated with this way of investment that could, at a worst case scenario, bankrupt you?

If you connect with the wrong kind of people, you might as well look forward to being bankrupt.

Even if borrowing money at a higher than average rate, being able to fix a problem and pay interest on it can be way better than the property failing, and going bankrupt..