I'm living in Niceville, but looking for my first BRRRR in the Ft Walton Beach area since it's a little more affordable. 

Next month there was another property on the same block, basically identical to the first one, on the auction block.

Just in general I would stay away from the bad areas since certain areas theft is a problem...how do I know that?  

It is part art and part science.Many of our rental properties are almost identical down to the finishes and cabinets (and in the same suburbs of Milwaukee) and I get a 10% swing on appraisals - at least 5% in either direction.

I've heard of terrible property management but this sounded like outright theft (rather than mismanagement) based on your story.  

The remote chances of a theft are inconsequential as if someone wants in a home bad enough, they are kicking in the back door.  

It's not like comparing apples to apples where you can view one 4 unit building against another unless you are building identically permitted buildings on parcels that share the same site conditions.

The seller doesn't have the borrower's driver license or any identity verification paperwork.

Either A) the gf's mother stole her identity and impersonated her on the loan application, B) she's lying to you and is going along with it, or C) the inquiry is unrelated to the mother's loan.

Theft vandilism etc.. you know the hood..