Look for a tarped roof.

Fix the roof and replace carpet (but we don't have cash reserves to pay for it). 

In Los Angeles, $385K won't even get you a 1 bedroom condo with a caved-in roof and negative cash-flow.It was bad enough 2 years ago, but now with the Rams moving back and the new stadium under construction, things have gotten bat guano insane.

make sure you have all liability covered under an insurance umbrella 

If that cave-man "effs" up something, and disappears into the woods, you still have the contractor's bond to cover the liability.At the end of the day, you have to assess the risks.

Unless it's near a university, no one wants to rent those.You will have much lower capex - there's no roof, no foundation, no gutters, no hot water heater, etc.

Your example of covering a payment plus with an investment property. 

I have not done a lot of research on laws governing self-directed IRA business transactions, but with self-directed 401ks, the IRS seemed to be pretty good at covering all their bases to make sure that if I am getting that tax benefit, I remain essentially housebroke until kids who are my age are calling me grandpa.

Hello BP,I need a commercial real estate appraisser covering the Houston TX area.The property is located in spring Texas and the appraisal is needed urgently.Any recommendation is greatly appreciated.Thank you all.

I mean you have been doing it already and since you can cover you debt service buying an house that will provide you two additional sources of income if you can make it cash flow that can also help you pay off your current debt, and as you pointed out you would also have a long term asset that should reasonable go up in value as well over time.