They already understand they'd be walking away with zero but its better than going bankrupt on a house they can't afford. the home has beautiful upgrades and really nothing else needs to be done other than the foundation and chimney. the last owners pretty much fully renovated everything except the foundation and sold it like that. my question is this: with only about $20k in potential profit on this one, would i stand a good chance of pitching this one to some hard money lenders and getting the financing?

None of those bankrupt people thought they needed a factor of safety either.   

For us, we knew absolutely that we wanted to start creating passive income.And since we were COMPLETE newbs, we went for a small rental property that really only needed cosmetic updates (paint, carpet, etc.) because 1) we new if things hit the fan, we wouldn't go bankrupt or fall into massive amounts of debt and 2) it was "controllable" in that we didn't have to worry about major plumbing, electrical, or structural issues. 

So if he is going bankrupt, then negotiate a price at which you can acquire the property, then assign that right to purchase it to another person/investor at maybe 10k more than what you put the property under contract for.

For example; if you are over/under on a property and your LLC goes 'bankrupt' the bank will still come after you personally for any outstanding debts associated with the LLC (because you have to sign as a guarantor on the mortgages that are in the LLC name).An LLC is only there for liability claims... banks will still get their money from you even if the property and note are in the LLCs name.

We know 1 out of 5 goes bankrupt how could they donate to campaign LOL The problem with supply and demand mismatch is hard to figure out.

The bankruptcy court can invalidate a lease, however, if they do the bankrupt no longer has a lease nor a right to the premises.

If you feel the tenant is fixing to go bankrupt as a brand then might be good to negotiate and take what you can get.

I would rather wait and get a great deal that will allow me to make a profit than rush to burn everything and get myself bankrupt. 

As we are in the Silicon Valley, some of our tenants  who in this case could be considered "Upper Class" have been from tech companies with substantial wealth/income but morally/ethically bankrupt.