Discounts on REO, especially step discounts are derived from property condition or title defects.

This is true unless the item needing updating is defective/non-functioning.

That means any coverage you bought would remain intact with you still as the insured.If a defect were discovered that existed prior to you taking title, then the LLC would sue you and the title insurance would cover you.If you created the title defect after you purchased it or during the transfer to the LLC, you essentially still have no coverage.

So I would really like to focus in on how to not get stuck in a "neighborhood" (read: subdivision) that sinks due to builder defects or poor neighborhood maintenance.

The seller was aware that I wanted to add a second story.I know if the repair hadn't been done it would be classified as a "latent defect" but I am not sure of the situation if the crack has been repaired.Do they no longer need to disclose it?

the house with the missing gas furnace and AC was insured but with the butcher job of the removal and cut lines and ducts, I'm sure it could not be repaired for $5,000 but it was listed as insured.And other cases there have been relatively minor flaws, well less than $5,000 and the property is listed as uninsured.And then there is the third type of property, where I marvel how the property was financed FHA the first time as there are clear major defects that would be rejected by an FHA appraiser, so how did it become a HUD repo?

Owner pays water (about($150/ month), tenants pay all other utilities.The place is well taken care of with no obvious defects.

Could be based on unknown defects in title or the property.

The consultant who prepares the work write-up and cost estimate (or an architect, engineering or home inspection service) needs to inspect the property to assure: (1) there are no rodents, dryrot, termites and other infestation; (2) there are no defects that will affect the health and safety of the occupants; (3) the adequacy of the existing structural, heating, plumbing, electrical and roofing systems; and (4) the upgrading of thermal protection (where necessary).

Today he told us that his agent says there is no coverage, because he has a landlord policy that only covers defects and failures of the plumbing, tenant caused damage is not covered.