However, it is a potential nightmare for your parents since they are taking a risk. 

There aren’t many residential development companies operating at this level, which reduces competition and risk.

If I were to reduce or take out the vacancy, the 2 would cashflow.

Hi, pre foreclosure in all of its permutations, before the bank sends Notice of Default (NOD) or efter which is state even county dependant but often starts a 4 week clock till the trustee auction are the 2nd most difficult deal scenario and IMHO only experienced investors should bother, the 1st most difficult deal scenario are bidding at the court house steps on lord only knows what is being auctioned off sometimes even 2nd mortgages, you need to do so much home work to attempt to reduce your risk at the court house steps...Pre foreclosure no one talks about these issues, always about the nice sounding stuff like "motivated seller" get a good deal etc etc both are usually not the case.- 95% of folks in pre or post NOD want to stay in their house, keep their house inspite of them 100% will loose the house at the auction. 

You can get more cash, but you add risk and lose flexibility. 

This reduces exit options and affects the value. 10) Small number of small units is the most expensive residential development there is.

That 18% premium reduces the cap rate quite a bit.

Why take a larger risk when you are sitting great?  

But the one thing that you can control is your creativity and how far are you willing to go with risk .

Most wholesalers are not good at what they do, are unlicensed (which is illegal in most states), and lock up the property in a contract with zero risk to the wholesaler.