I'm guessing the first mortgage holder wouldn't let it go at auction for much less than what is currently owed.If it becomes an REO, is there any point in trying to work out a deal with the lender before they try to list it for sale?

A few of the goodies:For renters - Payments - suspended Prohibitions - No fines, no debt, no repayment, no effect to credit scoresFor mortgage holders - Payments - suspended Prohibitions - No fines, no debt, no repayment, no effect to credit scoresTenant can simply stop paying without any evidence of true need - to include utilities which the owner may then be liable to cover.However for a mortgage holder to qualify for relief several extremely onerous loops must be passed.   

While I am a CF+ investor, if you are a long term holder then plug in your numbers for year 2 or 3 with increased rents.

Here in Texas paragraph 4 of the 1to4 resale residential contract is reserved for license holders disclosures.

It's ok to list properties you have UC, not when you aren't the contract-holder.

So any kind of short term intent like fix n flipping does not qualify anyway.So for a buy and holder the 1031 is the tool to use when and if you ever want to reposition. 

We have live in flippers, house hackers, buy and holders etc.

If the buyer defaults, the pref equity holder should be able to regain control of the property or force the buyer to pay.This is how some institutional investors get into syndicated deals: they provide second mortgage but call it "preferred equity" with terms similar to those if a mortgage.

The lender would be the first lien holder. 

., holder of the other end of your land contract.