Because of this, they worked with us rather than our competitors to help them negotiate with the bank.At the end of the day, either during the negotiation process or not too long after we closed, most sellers realized that the property that they thought they needed to stay in, at fair market value, was perhaps not the best fit for their new rebuilding situation and moved on.  

For comparison:Currently working on a 1350sf SFR, needs full perimeter excavation and foundation repair, tear down garage and rebuild (including footings), driveway remove and replace, gut kitchen and 2 bathrooms, minor wall repairs, paint, flooring and light fixtures, new electrical panel, furnace and air conditioning replacement.Total rehab cost is $56,000.I couldn't imagine your property needing more work than this, which leads me to believe that you're contracting your repairs out at a cost that prices you out of the property. 

Aside from tear-down rebuilds there aren’t many options to really generate “new” income in that area.

It was fire damaged so we had to rebuild about 1/2 of the house, and we also reworked the layouts on both floors.

My concern is that all the properties we saw walking around were either a) freshly rehabbed and look like they would be priced at a premium, as well as being SFH, OR b) literally, completely falling apart (windows busted, roofs half off, walls open to the outside) and would require a gut or even more hardcore rehab and rebuild to make habitable.

Tearing down a small house and rebuild.

Recent repairs on 4 family.Sept-- repair screen door--costs 8.00 for screen 1hr labor, replace light fixture cost 18.00 1 hour laborOct-- Water leak in roof Temp patch to valley--- costs paint 68.00 (5 gal) roller covers 6pk 9.00, drywall compound 0.00 (left over from previous repair) 10 hours labor, professional repair to slate roof and replace 2 valleys 750.00Nov-- Repair toilet-- rebuild kit 16.00 shutoff valve 4.00 short flex line 4.00 labor 1hour.If I had to pay for labor on these repairs it would have driven the price way up.

I have been researching the HUD/FHA 203K Home Rebuilder’s Mortgage but am not sure about how to start or where to start even.

They're motivated to restore and rebuild their finances, and they appreciate having a nice place to live which makes rent payments a priority for them.

Once people are settled elsewhere, there is little incentive for them to return to the devastated area, which can take several years to rebuild or may never fully recover.