Because buyers don't have the knowledge, time, experience, or economy of scale to make it worth doing. 

I have a feeling wholesellers or large scale flippers are simply offering them money on top of the commission to take their deals.Here's an example of a current deal we've been submitting offers and trying to get some communication going for the past YEAR.Last List Price $225kOur Cash offer: $280k Cash with proof of funds ($450k in bank account for past 6 mo+)Accepted Price: $220k[Just for your info ARV was around $450-500k after around $100k conservative rehab estiate ][We also submitted a $290k cash offer about 6 months ago, but at that time the property was listed at $415k (which is the entire amount of the loan due)]This is just one of several examples of offers we've had out where we offer much more, and cash, and the short selling agent (who controls the entire deal) accepts something else.  

He uses it to haul around washers and dryers now, and I have a coin-op that makes me money ;)  Not anywhere near your scale yet, but the first time I've traded a car to help my RE game ;)

This would not scale to a large number of properties, but works for me today.  

It has worked out well and we are wondering how we can take this to a larger scale so the entire mortgage is paid through these rentals.

You find the mortgage amount in the land records or if you do it very large scale you can subscribe to various companies that supply that data. 

Unlike real estate which can be a somewhat passive investment if you have scale a small business is not. 

I personally ask them questions like if a stranger viewed their home what condition would they say the exterior and interior are in based off of a scale from 1-10.

I worked as a Project Manager for a national builder in the Permian Basin and even as the #1 home builder in the nation we had nothing but difficulties finding, utilizing, and keeping trade labor not to mention out of state (or at least out of the area) suppliers and manufacturers.

You want a job market that is growing and not dependent on industries like manufacturing.