Starting next month when my renter moves in i will have only utilities and taxes as overhead at my new home in michigan. 

How bad are the capital gains taxes?

Also property taxes were incredibly cheap at $500 / year (expected to go up in about 3 yrs). 

My other thought is that it may just make sense to buy the property so that my monthly burden is equal to or less than it would be if I rented in the area, because at least I am paying towards my own equity.  

I understand the tax foreclosure and bank foreclosure before the REO but the HOA had me confused.

This would fit very well into my long term strategy of growing my LTR portfolio while still providing big tax benefits against my W2 income. 

If you aren't a Real Estate Professional, I am not sure adding more to your portfolio, with the main intention being tax reduction, is the best option.

I have been driving for dollars and mining the county auditor's site for homeowners who are delinquent on their taxes.

This is all before title, tax, conveyance fee's, water hold, etc.

If so, you can use the 121 exclusion and save on capital gains taxes to sell the home.