There isn't any equity stake to protect your principal capital investment.

What are the drawbacks of these properties? 

Yes, the same Adam Smith who laid down the principals of Free Trade Capitalism.

While that is good for lenders, since the process can possibly be less than 30 days, while other states could take years. it's a hazard for 2nd lien position holders who could not be informed quickly enough to safeguard their principal before the senior creditor forecloses or don't have the capital available to pay off the 1st lien holder to preserve their loan position and avoid foreclosure. 

First time posting and getting into the investment scene, I currently have a single family home that was my previous primary, and looking into purchasing my 1st true investment property, trying to find some advice on the financial aspect of the purchase, here's my scenario;Currently going through pre-approval with the builder and I do have liquid assets enough to cover the downpayment for the property (40k) but I do have a car note (41k, 800 monthly, extra 500 to principal monthly) and a Patio upgrade (25k no interest till March 2025).

Assuming a current typical interest rate of 7%, principal and interest will run $536 a month.

Thus your asset is appreciating (building equity) every principal payment you make. 

The examples are as follows:Example 1.Taxpayer A has owned and used his house as his principal residence since 1986.

Bankruptcy - It is theoretically possible that you may lose your interest but you should no lose principal if you get paid via the bankruptcy.

I think it's important to start with this - is your 250k debt what you owe in principal on the mortgage on your home or is this separate debt (credit cards, cars, medical, student, etc)?