My intention is to purchase the note and work out a deed-in-lieu (which I don't think is possible because the mortgagee doesn't have the deed to the property) or wait until Sheriff's sale, take possession of the property, fix it up and resell it.

I am a commercial real estate broker as well as an investor.I would say what has made me successful is the WILL to never QUIT.When I get on a workout machine I go for an hour doing cardio.Most will do 15 minutes,some 30,a few 45,hardly any will go 60.When I run a marathon my mind wants to quit before the body but I push on.The last part of finishing takes the most mental toughness and a will not to quit.You will need this skill in real estate.Making a deal happen will be like being on a roller coaster with many highs and lows.It has taken me a year to close a deal before.When I was assembling land deals I had to talk to the owners sometimes 50 times and it took 6 months to agree to terms and get under contract for the developer I was working with.It will take a lot of time and blood,sweat and tears in the beginning but it will build toughness and character.Remember if it was easy anyone would do it.Their is competition in EVERYTHING you do.You have to find something you enjoy and then strive everyday to be the best at it.Work it like a business and constantly gain more knowledge and develop systems to maximize your time.When I close a hard deal that takes a long time I get a great satisfaction that I made a deal work that many would have just quit on.

So at this point, everything looks like it will work out, but I definatley gained a little experience in this situation.Jon & Chris, your advice was very good and something I will be taking with me in future dealings with potential tenants.

I didn't think I would ever see any of it so I tried to work out a deal that if he paid me $100/month for 10 months I would accept $1,000 as payment in full.Well believe it or not, he actually paid for 8 months in a row, then he just stopped.

A friend of mine recently purchased a 4-plex with a FHA owner-occupied loan, not a concept for everyone but it will work out very good for him.

Which in your opinion is a better option, hire a GC to manage the rehab or sub all the work out yourself?

Your right, every thing is cash flow as long as you work out the number.

Then, you'll have to work out a deal with the new owner.

For my third house I started to show some patience and decided to walk if things didn't work out.

The trouble is, they are VERY management intensive, and the banks know that.