But their ultimate goal is to get a paying tenant - whether it's the current person or a future person - and the auctions do not usually bring a profit....the winning amount usually goes towards the amount delinquent. 

There is most certainly a methodical and intelligent way of installing sub-meters and ensuring an additional profit.

How on earth is an investor supposed to compete & make a profit?

Interest rates are rising, which is putting the squeeze on finding profitable rentals. 

Cash flowing at 950 gross net would be around 300 after all deductions currently valued at 70000 and no repairs , is it good to keep this or make one time profit and sell it off and look for other properties

If not, I absolutely wouldn't pursue a deal that large. 

You can change the macro to either tell you the maximum purchase price based on your numbers, or to base your profit on a known purchase price. 

I know a number of other people who have very good success with profitable vacation rentals here.

It could be equity sharing where you each take a cut of the profits after expenses are subtracted out or a loan type structure like you said that pays him an interest rate.

The I am going to sell the contract at a 40K profit, and thus make money off of you.