However, somehow, the property got lost in their system and was never given back to Wells Fargo and was neither maintained by HUD. 

Here is a part of the letter, I sent to the seller:The home inspection was completed on September 29th (please see attached) and the following issues were pointed out: 1.The wooden floor frame in the middle unit is deteriorating due to either prior water leak in the bathroom or due to moisture infiltration through the walls and foundation.2.There is evidence of significant settlement under the middle unit bathroom and north closet.3.The settlement of the floor and walls has also resulted in settlement of the roof frame above this area, ceiling shows cracks.4.There is an obvious depression on the roof – water is ponding on the roof above the middle unit, which adds excessive weight on the roof and potential for leaks.5.Asbestos containing material has been found.6.The current bedroom heat installations in the north and south units pose a safety hazard from carbon monoxide, fire and oxygen depletion.7.An electrician performing upgrades did not use ‘arc fault breakers’ in the north and south unit breaker panels, which is required by the national electrical code.8.Upgrades to the electrical system, promised by a real estate agent, have not been completed yet.

I'm assuming that since I'm looking at an 8 unit multi, the banks would look at the net operating income to determine the ARV.  

Ive been reading and learning for months about multi family and buy and hold, and never thought my first deal might be a driving for dollars tax deed, so I am trying to educate myself a little more on the subject. 

I'd love to hear about your system.

Consider house Hacking or multi family for your first buy if you are thinking of being a real estate investor. 

Septic systems can be fine, but you will have to have it serviced every couple of years.

They partner with Smart Property Systems which provides full service property management software with double entry accounting.  

If that's the case you could qualify for a 30 yr conventional loan if the home is on a engineered certified foundation system.

I have experience in buy and hold, but, would also like to reap the knowledge on acquiring more rental and multi-family properties. if I could assist any knowledge that I have, I'd be glad to share anytime.Aloha