My rebuild value is about $1.8 million per a very well qualified contractor friend. 

Use a experience/formula to estimate or get an estimate from a General contractorFor estimates on rehabs we are using an internal formula, paint = X per square, flooring = X, kitchen rebuild, etc, etc...

The other has a burned down house, rebuildable or place a mobile home on the land.

Pick a market to invest with cash while you are rebuilding your credit.

There was a case here where a property was destroyed by fire, the insurance claim had not been paid yet and the time limit to rebuild was expiring. 

Additional fee for converting stain grade trim to white 800 Paint all interior of home which includes all ceilings, trim, doors, walls 3145 Install doorstops throughout home 36 Replace lightbulbs as needed 60 replace outlet covers as needed 60 clear all drains to flow properly 40 Final Clean 300 Fee for trash out of rehab process 100 Go throughout home and vacuum and clean out debris, bugs, trash on window seal trap between storm window and house window 100 Two Cars to be Towed TBD Dumpter Cost Funded Separately Initial Yard Cut Funded Separately Kitchen Heavy Degrease interior and exterior of cabinets 50 replace damaged face and missing face on two drawers 140 rebuild base floors in 3 cabinet bases 105 oil prime, sand, prep and paint interior and exterior of all cabinets 700 Line all cabinet base floors and wall cabinet floors with stick down vinyl after repaint 100 Cut swelled bottom of countertops due to water damage 15 kitchen has one window with one blind 35 replace flooring in kitchen 320 Install new electric stove, new vent hood, new fridge 1825 Dining Room hardwood floors are extremely dirty and greasy.

REOs are not that common here ... having three pop-up in our area in a two month window is all but unheard.We will continue to pursue REOs, but will try other "creative" gambits as well and re building a database of "candidate" properties in our "grid areas" to try and get to the owners before the house goes to market or foreclosure.

If those sellers I have my eye on change their mind, I may do a refi on some free and clears, but in the meantime my acquisition fund is rebuilding quickly.If you don't have a specific deal in mind, I'd just keep the mortgage you have as is @Adam Stroik. 

In the city that generally means a gut and rebuild. 

Needs new siding, rebuild of two front porches, new roof, and replace/repair most exterior trim.