It was folded back into the bank's assets, the bank was "forcefully merged" into another bank and the condo development then "sold" to a developer/realtor who then put together a slick marketing program and was selling them via video infomercial.Of course outside forces also pushed prices higher than they ever should have been in the past couple of years.

What I was hoping to get some guidance on is two fold... 

We have dbl'd my pension folding money.

In fact, some months ago the largest REO brokers in southern California were explicitly told by the major banks to fold up the tent.

The question is really two fold: how to find a property that is offered at 20-30% discount and once it is found how to make sure it is really a discount and not a market price?

Based on my example above, my chance of being sued by tenants automatically goes up 20 folds.

My main concern is that the wind here is pretty bad and my experience is that they will fold to where you can't read them.Maybe I'll use aluminum........jk

The half bath connects to the master bedroom with a hanging/folding "door".

The downsides to private lending as I see it in your case are two-fold. 

You're blind folded with your hands cuffed behind you in a rattle snake den.I can tell you that anyone who sells under the threat of FC is not a happy camper 30 days later, there is resentment, they wonder if they got taken, their credit is already dinged, usually they are moving to a less desirable home and some want revenge even if it was all their fault.