If an applicant passes your initial criteria then at that point you request they complete the background/credit screening.  

Initially, I thought this was the perfect scenario for a buy and hold investor - acquire a property that is already rented and cashflowing, no brainer, but this hasn't been the case.  

But my biggest fear was starting out; taking out a loan or using savings for the initial investment, and hoping that everything works out.

You would just let them initiate the court proceedings?  

Next step is the tenant screening process.  

I know that every situation is different regarding who the borrower is and the foreclosure regulations regarding the location, but I was wondering how often it happens and how the process usually pans out when purchasing a non performing note (whether a failed loan modification or initial purpose for foreclosure) and issuing a foreclosure.

Unless someone can talk me out of out of it, I believe my first step is buying a 2-5 door multi-family for a great deal.

2) given their offer would cover more than my capex costs if I just did the $4,000 soil leveling, what would your next steps on the negotiation be?

Is the partner just the initial capital and then they are out after refinancing (Private Money)?

You have to be willing to do what others won't to succeed.With my brokerage I can't take a chance on verbal that someone will follow the steps to succeed.