If you want to buy another rental, then saving your money for that (assuming you have room to borrow more money) is probably the better idea.

You better reach out to them days before the auction and give them a simple choice: allow foreclosure sale  to occur or allow you to take it over from them, with equity justifying your purchase.    

@Michael Challenger I scraped all the cash I could find and borrowed from family.

Cities like Memphis and Columbus often have more affordable properties and good cash flow opportunities, making them popular choices for investors.

Is one a clear choice and I am having trouble seeing it?

Commercial properties can be lucrative, but the financing/underwriting required from lenders is generally more "conservative" relative to residential and usually have higher interest rates (unless you have a "rock star", long-term commercial tenant in place) and generally require more equity from the borrower compared to residential.

Smoky Mountains seems to be a solid choice but I wonder about oversaturation and competition in that area?  

$280k home for $2,500 rent is a personal choice.

So they started doing the loans that everyone else turned down, ultra high risk development deals, second mortgages, land loans at ridiculously high LTV, loans where the borrower has none of his own capital invested, 85% of AFTER stabilized value loans.  

That may not apply to you, as a financial professional, but I thought I would share the story.Obiously you could re-lever your portfolio to bring the ROE back up, but then you have to place those borrowed funds somewhere that nets a high enough return that the portfolio is ahead, given the drag of the interest and any transaction fees.