I would love it if someone could give me some direction on this subject as well so that I can properly focus my energies on making it happen.  

If a property is properly winterized is there much risk of further damage due to freezing?

I am sure you have thought to do this, but just in case you are assuming it was properly done and it may not be.

@Joshua Lee Wegner There is always a way to make a deal work...it just sounds like this may be a lost cause...foreclosures are pretty quick now that there is very little backlog.What is the lien balance?

For example, if you purchase a $500k legal balance (unpaid principal + accrued interest/fees) for $200k, then rehab and sell the property for $300k, can you write off the uncollected $200k (the $500k - $300k difference i.e. not pay taxes on your profits, as on paper as the lender, it is a "loss")?

We're looking for areas with the right balance between appreciation potential and rental rates. 

I then take that 400K and pay off (or just pay down) 4 separate properties that each had a 100K balance on them.

The details will fall into place with the proper team.

As long as your CPA takes the proper deductions, it shouldn't hurt you too much, though.

The owner dont care about the equity on it, his goal is to clear out the loan balance.