The taxes here are VERY high (even in comparison with NY--I've invested there as well), but the thing that surprises many people is the MUD tax (municipal utility district) which can sometimes be as high or higher than mortgage on a modest home. 

What services are you capable of offering to someone whose house has 3 ft of mud inside?

Generally; unbuidable, title issues, tax issues, wetland issues, etc. that make them undesirable for anyone, except suckers.

And I’ve got the room but I’ve also got wet seasons down here to go along with the thunderstorms and tornados and unless I put down gravel or some other hardpack material, everyone better show up with 4x4s and mud tires!

If your purchase price is $60k and the structure is worth (discounted) 120k, that means that the land value is negative $60,000 - somebody will basically give you 60k to take the land, because it is so undesireable.If the neighborhood is so undesireable, that someone is willing to give you $60,000 to just take the land, you will have a hard time finding a tenant, who is willing and able to pay top dollar - they would rather live elsewhere.Second, cashflow is the most important, but often not the biggest of the 4 income sources you have as a real estate investor.

This original post was not about getting to into the mud, just the real estate predictions.

Some of the disadvantages are that you could possibly get stuck with a unit full of tires, or some other undesirable items that you have to get rid of.

Having them live in the house while trying to put up sheetrock, mudding and installing flooring etc will be very difficult with someone living in it. 

I'm looking to find out what strategies are working for upside down properties in undesirable neighborhoods.

In effect, you have shielded your rental portfolio from the undesirable tax effects of your flipping business.Separating the two practices with entities also has important asset protection benefits – if the corporation gets sued, only properties within that corporation are subject to a judgment, if you conduct yourself properly.Installment Sales ProhibitedWhile investors can do installment sales, and only pay taxes on the money as they receive it, a dealer has to pay taxes up front on any income due from an installment sale.