Chance of deal success needs to be high- 95%+.

Chances are they are paying others who are not as accommodating as you (amazing how people will make those car payments while jeopardizing their homes) - and it's time for them to move on to housing they can afford and to a tenant that does not require you to subsidize them.  

The auctions, although online now, are live foreclosure auctions, i.e. the auction style sale which is the culmination of the foreclosure process. 

Quote from @Devin James: Gross Margin is an important calculation for developers/builders.Gross Margin = Gross Profit / RevenueWe shoot for a 20% gross margin on our New Construction HomesReal #’s:Home Sales Price: $374KClosing Cost: $18,700Cost of Construction: $258KLand Cost: $30KGross Profit = $67K$67K/$374K = 17.9% Gross MarginCame slightly short of our goal of 20%Homes Values and Build Costs are constantly fluctuatingI wish we had a crystal ball build larger homes. average new build in our market is 2200 square feet, 4 beds, 3 baths, 2 car garage and sells for 515k. construction costs lower if design is good and find the median or average home sale price and push that up. my guess is you built too small. 347k is cheap. we target 429-479k price range in columbus ohio for single family homes and also only purchase close to urban core where premiums are 20% higher and we build smaller like 1500 sq ft where price per square foot goes up. 

There is a 92.7% chance they are lying about the insurance.

I kind of didn't want to mention that on the listing so that it wouldn't turn people away before they even had a chance to see it in person.  

Purchase price: $450,000 Cash invested: $650,000 Sale price: $1,600,000 New construction of single family

My experience is though, that any fed backed loan, automatically is offered a chance to do a loan mod. 

I thought there was a chance that one could use real estate to directly lower their main source of taxable income (such as a w2).

There's a good chance the issue(s) you face has already been discussed and answered.Ask questions in the appropriate forum.