If you use cash flow - it's more safe imo and debt leverage is risk but reward if you execute on a value add project.

You have to understand the market, neighborhoods, numbers, and realize the risks involved buying houses "sight-unseen".

zero risk, there is absolutely zero risk when you pay off existing debt :)

I know this is a personal liability/risk question, but I'd like to focus more on usual policies and prior cases if this would be sufficient to most?

Best bet would be a “partnership” with a monied individual looking for a high risk/high return passive investment with you providing the “active” part.  

Feel free to answer, but it's rhetorical.

There are risks too, when buying condemned and burned-out houses because you may not be able to control the environment where these properties exist.

Warning:If you depreciate a property down near zero and then have to sell your property at a loss during a situation of distress...You could end up giving all the proceeds to the bank AND owe the IRS a big chunk of money for recapture.Long-term tax planning with real estate needs to be coupled with risk management and making sure you don't lose any properties.

However, I disagree with your comments that the investor buyers who buy these homes have a greater appetite for risk and know the risks that exist.

I don’t know why anyone would take that risk for little reward.