Lastly, if the tenant does become delinquent and we have to file a claim with Rhino Insurance to collect their deposit, we're adding to the financial woes of that tenant and putting them into an even worse financial position when they wouldn't have qualified in the first place.Thoughts?

Also, focus on 2 years of job/income stability.Class D Properties:Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciationVacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions.

Then you state how that will be collected.

If you're living in it now, you'll probably be required to have a signed lease in place as well as proof that first month's rent/security deposit were collected in order to get a DSCR loan (they're business purpose loans and don't allow owner occupancy).

I don't even think its worth a sub-toSounds like you spoke to collections (who will tell you anything to get money) and not loss mitigation, as paying back due balances are NEVER part of a short sale.

Collecting quarters wasn't worth it.

Acquire a few performing notes and just collect that mortgage monthly for the next couple of years AND they don't require half as much work as rentals.

Perhaps in return they collect an acquisition fee,  collect a construction management fee & share in a portion of the upside.

Most S8 tenants have a history of bad decisions, often having convictions, evictions, bankruptcies, chargeoffs, collections, garnishments, etc.

Quote from @Michell Chase: The signed contract states a deposit was collected, so I would make that part of your purchase agreement.