Goals -Refinance soon-  I planned on going 15yr with the lowest interest rates I can get with a credit rating about 740- Yes I feel more comfortable getting stuff paid off quickly rather then having lots of 30yr loans-Build 20% equity with improvements prior to refinance-No more PMI !

My general approach/plan is to find a pre-foreclosure home that I can pick up below market and rent out, ideally to the tenant currently in the house.

You'll want to hjave this lined up before you buy, plus yo'll want a pre-approval letter so when and if you find a place you want you can put in an offer imediatley!

I have done a lot of researching and talking to people on this matter, but I am still not 100% sure, so here it goes.I am currently on a month-to-month lease where i have paid my last months rent along with a security deposit.

Unfortunately, the property I was looking at paid off the taxes so it won't be going to auction.  

No, cash flow is the money left over after all necessary expenses are paid each month. 

You'll likely need to provide a legit pre approval from your local HML.  

Get some type of a pre-qlimarlification loan letter that states your time needed to close and the maximum dollar amount will be useful to submit with your offers.  

I rented a house to a couple on ODSP, the first few months were paid then they would skip every other month because they would cancel the odsp and renew it randomly.

For example, when I bought the first duplex, I paid cash, and bought outright.