For that reason (so far) I've focused on distressed, value add, and forced appreciation deals. 

hypothetically speaking, If I saw a distressed property and I contacted the owner and he is willing to sell me the house for X amount.

Our thinking is to either foreclose and sell the REO to investors, or just sell the distressed, pre forclosure note so the investor can "be the bank" and foreclose. 

If that was a distressed deal no way I'd agree to that.

They are all distressed and you will need to work for them.

The 5 cap property has higher demand and the 10 cap property that you say should be more profitable has LESS demand.Please explain.Sure, maybe the cheaper property is in a location where people don't expect appreciation(appreciation has nothing to do with CAP rate) an in the area with higher appreciation, people are willing to make less, counting on appreciation to bail them out.Maybe the lower priced property is purchased off market.Maybe the lower priced property has an distressed owner that needs to move the property immediately.Maybe, someone is just an idiot and their property is priced over market value.Or maybe, just maybe we have the ability to invest in different markets! 

Your home will be reappraised after the rehab for this refinance and may increase in value enough that it may make sense to cash-out-refinance or HELOC the property to rehab your next investment property🏘️the larger lot distressed property may open up additional opportunities to you via EHB 1337 and future associated ADU/DADU opportunities.I bought my first distressed investment property the first year out of college (duplex in Bremerton for $350k), then bought a second turn-key estate sale (~$200k SFH in North Carolina).

There's a myth that distressed properties can't be on the MLS. 

I feel confident that this act isn't acting in the "grey areas" of companies that become investigated by federal governments... if you are insinuating the cause to the former investors distress is something to feel concern that the federal government might investigate upon... well I'd again, urge you to read the entire thread and you will find sufficient evidence there showcasing in transparency, exactly how we operate.... no grey areas to be found there.However I appreciate your concern :) If you have any questions or would like more information about our company and its practices, please feel free to reach out.

Out of the country investors got pitched to buy the cheapest, distressed row homes in inner city areas of the US like Philadelphia and Baltimore.