There have been several favorable rulings on this issue as it relates to trusts to the point that most accountants are now accepting this as trusted practice for LLCs as well.You never say never with the IRS. 

&"Men of action are favored by the goodness of good luck."

It's best to operate like a business with standardized requirements applied to everyone equally, every time.Do yourself a favor: buy "Every Landlord's Legal Guide" by NOLO.

In Arizona, for example, it's typically a 'forfeiture' rather than a foreclosure, which can be more favorable for sellers.

Meridianville (10 north of downtown Huntsville), Decatur (25 miles southwest of town), or Athens (30 miles west of town) will have plenty of B/B+ properties under $250,000.Given that cash flow is your primary goal, these areas outside of Huntsville may be a better fit for you anyway—rent-to-price ratios are definitely more favorable outside the city limits than within them.Still, Meridianville, Athens, and Decatur remain close enough to Huntsville to share in the area’s growth which, in my opinion, bodes well for long-term appreciation.

At favorable LTV's (75% and below) rates can be very competitive (currently in the 7%'s) or sometimes nearly half the rate of interest on alternative second lien positions loans.

How do I close this deal with favorable terms?

They are smart enough to know they will make a great amount of money in the long run.Investors like the OP seem to think they are doing us a favor. 

Thanks for the response, I assumed a primary residence mortgage would have the most favorable interest rate so that’s where my question was coming from.

So say bank foreclosed for $120k bid then you purchase for $100k, the homeowner would owe the $120k plus the statutory allowed charges (interest, taxes, insurance, etc).The work done to the property is a little tricky, but really favors the investor for the most part.