(slightly more than inflation). 

Those market conditions (hyper inflated house values with loans being handed like candy to people who couldnt possibly afford them) do not exist to have that level of magnitude of decline in home values.  

I've inflated the repair costs for worst-case scenario, and conservative on vacancy etc.I've set $80,000 as my bidding limit for a house that comps suggest i can get 150k reappraisal on (refinance after 6 months).Is that too safe?

After you adjust for inflation that is 25% (assuming 2% inflation per year).

You need to at least follow inflation.

Instead, if they would have just kept renting them out, eventually inflation would catch back up, even if it took 20-30 years. 

I would show her the math for the follow:- $x is the market value (real market value, not inflated)- $4% - we'd pay a cheap real estate agent 4%$x-4% +your closing costs  is what we'll sell it to you for. 

The money used to pay off the loan at the end of the term will have reduced value due to inflation.  

There are loan programs that will go higher, but without that Fannie/Freddie subsidy on the back end all profits must come from you the borrower directly, which will mean some combination of worse rates/fees/terms... no one lends money at 3.75% or 5.375% without some back-end or side source of revenue or revenue potential, just like you're not going to lend me money at 5% (your base CoC ROI = 5%) unless there's some other side hustle or back end thing in it for you, between inflation and opportunity cost you'd just be throwing money away to do so.

Any appreciation/inflation that happens (who knows what that will be)4.