You began with the question of how to invest a certain amount and continued with asking about living in that investment property since you're also considering moving with your family (or at least it appears that way).In my opinion you should begin with separating the two: Where to live and how to invest.

"The Millionaire Next Door"  may be one that interests you as well, it debunks through test studies what makes a true millionaire and explains how many around us who may appear to be a millionaire are actually not nearly close to where they could be financially.  

When you drive for dollars you can either look for houses that appear vacant, or just start knocking on every door.

What would appear on the credit report in this case? 

This has stood up in court in countless occasions.

You would reach a larger audience and could possibly end up courting several potential partners. 

Well, it appears for an increase of 11 dollars per month, you can redeploy 20 thousand of capital for new deals.

The bank wants its money,all of it.If it was a bank foreclosure sale it would be handled by the court and usually done at a courthouse or other designated area.The bank will always bid first for the full amount of what is owed and you have to beat it or let them take it back and negotiate directly with the bank for a lower price.If that's not exactly what's happening here I wouldn't touch it with a ten foot pole.Go back to the bank and get more information and verify the bank is or is not foreclosing on the property at this time.

Your complaints seem to be fee based rather than "rule" based - so it appears that the concept of an HOA doesn't bug you, but the costs of buying and selling do.

@James Stokes,I have not read all the posts, so I apologize if someone has already mentioned that your depreciation number appears too high and your vacancy rate seems a little too low.