My default strategy now has been to use the positive cash flow to 1. pay down my lowest debt note, 2. save for small deals in Bay Area.  

What will you do when the loan or loans completely default and make zero payments for the next 150 days.  

little to no management and if the borrower defaults, then you foreclose and do the flip yourself?

The interest permitted by law on the delinquent taxes, penalties for default in payment, and the costs incurred for the sale may be included in the amount due.

Actually, I don't believe that's true...I'm not an attorney, but I believe that contract law in the US makes assignability of most contracts legal/valid, by default.  

You may have to personally guarantee the loan, which means if your LLC defaults, they can still come after you for the money.All banks are different.

It's almost always the worst condition property on the street with multiple levels of obsilensence in the floor plan or bedroom / bathroom count with illegal rooms or garage conversions the bigger the disaster the better.In the last few of years it's been short sale or properties in default with equity.  

I've been a hard money lender where the borrower defaulted.  

Down payments are your "skin in the game" to the seller, if you default, they keep your down payment.

The other thought is, if she's not interested in dealing with potentially foreclosing I do basically the same thing, but instead she sells it to me sub2, then I sell it to an end buyer with a wrap around seller finance, so I have the right/obligation to foreclose if the buyer defaults.