Doing a live in flip would take much longer, but would be significantly less risky.I've managed a property out of state and currently own a multi-family out of state and I agree there are definite downsides.

That being said, I am trying to understand the potential risks and downsides of this investment vehicle, and one potential scenario I am having trouble understanding is this: the borrower has a lot of delinquent taxes; say, for upwards of 25 percent of the value of his or her property.

That was also one of the downsides I saw.

M2m has no downsides and all the best protection for a landlord.

But everything in life has a downside, no? 

There are a lot of strategies you can use with contractors to limit the potential downsides.

I feel like I get solid returns there without the downside risk that Hagerstown or Baltimore might have.  

Their risk meter is broken and they see no downside.  

Assuming that the numbers are agreeable and all contingencies (financially) are accounted for, what are the downsides of not having title to the property while doing the rehab?  

I am more about my annual ROI and what my downsides are and what you are willing to do to protect them.