In terms of rehabbing the property, the workflow can range from throwing a coat of paint on a wall or two, to an entire gut of the mechanicals, windows, siding, and flooring.

Tenant shall hold Owner harmless as to any mechanic’s lien recordation or proceeding caused by Tenant and Tenant agrees to indemnify Owner in the event of any claim or proceeding.

You might need mechanical, electrical and plumbing drawings done by engineers.Depending on how much dirt you are moving, you may also need a civil engineer.Let me know if you need anymore advice about the process.  

When the actual owner of the property redeems the property after foreclosure auction (by paying foreclosure amount + 25%). what happens to mortgage on the property and other liens like hoa , mechanical etc. are all those wiped off and if owner responsible to pay those after redeeming property ?

While the bill calls for the department of local affairs to establish the fund there is no mechanism, defined by the bill, to actually fund the mitigation fund. 

for the last part of the question i asked, is there some mechanism to do this without having to come up with 150k in cash for the initial purchase? 

So one of the units was converted to a mechanical room.

Do you know if it is gas/oil/electric heat, steam/hot water, if the electrical panels are ok, etc. if it needs repointing, roof, windows, mechanicals as well as cosmetics, your looking at a lot of rehab costs.

What's the mechanism to effectively short real estate that will get flooded out?

@Joe P.I like to think I understand the point of your question, but I'm stumbling over the mechanics:  "...share the proceeds with you."