After my own due diligence, not only was there NO cap rate, the NOI was actually negative with no possibility of increased income because of rent control.

Usually if it sounds to good to be true, it probably is. :)  But I can vouch for Cozy being legit, and I have no affiliation to them other than I'm a customer. 

Its your house.There are quite a few drawbacks to bidding at the sale:You usually can not get into the home before purchasing it.You dont know what the person getting foreclosed on will do with the property as you try to evict them if it goes that way.There are lots of people bidding up prices making most of these properties, not really good deals.

Total annualized ROI starts out negative but picks up at about year 10 and goes to positive single digits.

It's not a big deal and you can work around it but it is something to be aware of.Typically 30 yr fixed rates better than HELOCs and if they aren't then there is real negative upside potential for interest rates because mose HELOCs rates are variable.

The oil tank is in the basement (so no environmental concerns) but I'm wondering how oil deliveries and cost are usually handled in a rental lease.

An entity will need to be done pretty soon if you have anything to lose.Always remember to do the math analysis and try to look at the prospective property or at least have a clause in the sales contract that allows you some time (usually about 15 days) to make a detailed inspection and possibly back out of the deal without a penalty that will hurt you too much.  

@Jim Carson, Never say never but a 50% depreciated national market isn't usually part of the normal real estate cycle.  

With that said, the declaration would note at what point the developer needs to turn over control to the owners - usually it's when 75% of the units are sold.

That does usually mean you'd have to share profits but it is a great way to learn the process from those who have been around the block so to speak.