You may not be able to "force" the owners to get rid of the tenants, they, and in turn, you, are required to honor the lease that they've signed.

I think the flooding alone would impact your rental rates and any potential for mold would really hurt.

The asking price is under market and has the "right things wrong with it" such that if I buy it and sink 5k and a month of work I can expect to force appreciate it by about 15%.   

What it entails is calculating that 1) your property will continue to cash flow positive during the recession 2) ensuring you're buying in an area that will not drastically impact your house purchase price (in other words, the price drop will be insignificant enough and will recover quickly in a few years).

And I realize there are some major forces at play in massive development projects that are the basis for these stats of less apartments. 

If you simply have to hold onto the property due to market forces or what have you, this will not work. 

We have bought tenanted properties and always strive to save a tenancy, rather than force a move.You've identified a key factor about low-income tenants.

Since they are tight with money, you might force them into an eviction, because they'll be between a rock and a hard place, as they'd need to come up with deposit for a new place, but won't get deposit back from you until they've moved out. 

I get the feeling that current tenant leases will have a huge impact on any commercial loan and as a result, there are not a lot of good deals on properties that have solid tenants.

Barring a nationwide plunge like in 2009, diversification across markets is a good risk-mitigation toolIf you are looking for a more passive investment, going the Turnkey route on an OOS property sort of forces you to actually be pretty passive.