You make $10k from STR, you have to come up with $22k out of your pocket, not to mention the upfront $100k down payment and possibly another $20k to furnish the house unless you bought it as an existing STR.So in summary, in today's market, it's impossible to buy a STR and be a passive owner and still make enough profit to cover your mortgage payment. 

Phoenix contains a rare combination of elements that have created an outstanding market for distressed property investments, including the following:Cost Savings: Distressed properties are sold below their market value and enable investors to take hold of properties at a trifle compared to traditionally listed properties.Strong Market Fundamentals: Being among the fastest-growing cities in the country, Phoenix ensures a high demand in housing and rentals, hence good potential for resale or income from rentals.Value Creation Opportunities: Most distressed properties need renovations; thus, such situations present opportunities for investors to increase equity by adding value.Population and Economic Growth: Phoenix remains among those cities in the country which are attracting more and more residents and business; therefore, this presents good, long-term appreciation possibilities of property appreciation and income creation.Challenges to ConsiderWhile the rewards can be great, distressed property investment is not without its challenges.

It could be possible to still negotiate a purchase depending on the stage of foreclosure it is in. 

Even if it were possible to wait it out and do a "gotcha" at the end, that's just not how I want to treat anyone. 

You definitely want to have the right insurance and make it as safe as possible IMO.

I want to put the smallest possible down payment down with an FHA loan on a multi unit.

Then my husbands aunt offered to sell us her place for this cheap, and I wanted to hop on it if at all possible so thats why I am here trying to figure this out lol

My though process in undercutting the bank by 1 % was to possibly attract qualified buyers.

I would prefer to sell the property vacant or the easiest less stressful way as possible, however I was advised that could deter investors buyers interest as the rental income is a one of my strong selling points.I am open and would appreciate any thoughts and/or suggestions from fellow agents or investors alike.Thanks in advance;)

Sounds like this could possibly be a Schedule C activity so keep self employment tax in mind.