Good points though...And I also agree that quite a few people talk about getting judgments like it's gonna be easy-peasy Japanesey and suddenly, the former deadbeat tenant will have an attack of conscience and in full reverence of the law, spend every waking minute making you whole.

I used ESCROW Holdback and a normal conventional loan to get this done. 

FHA will not touch them normally unless a newer one after 1970 approximately. 

Its the new normal .

find out what is wrong/correct it, make it a legal unit and rent out per normal.  

The numbers look good but I don’t see any allowance for vacancies, normal repairs/capex, turnover costs, etc.

But still overall expect Class C's to be harder on the units than Class B's.But it's things that are normally an issue on move out--maybe they will stay 15 years.Good Luck!

Normally, I would say that you should always try to cash out refi instead of selling.

What do you all normally do in sequence when rent is late?

If it was in decent shape and still had five years of life left in it (assuming normal occupancy, turnover every 12 months) then I would probably charge them 50% replacement cost.