One buyer was out of state like yourself and didn't like the fact the seller failed to disclosure some repairs.   

Question about hard money lending (considering having an exit strategy is #1)...Say the deal goes south for whatever reason and our exit strategy, or strategies, fail (worst case scenario) - does the HML take the house in a foreclosure scenario or what happens exactly?

Same fail. 

If the inspection fails, I cancel and allow the seller to get the property back on the market quickly.

Fail and get back up but keep moving; it's worth it.

They want to see that you're past the "80% of small businesses fail within two years" part.

I live in California I've tried to find the right resources but I always end up failing how do I get started wholesaling in California with little to no money 

I failed to mention that I will be handling the labor myself.

We already signed the lease agreement but my tenant failed to pay his security deposit and first mo rent through cozy.cohe said he will pay when i get a occupancy clearance from the village.

It seems to me if there are wholesalers trying to sell properties for too much, either they're going to go out of business (keep an eye on their failed deals), or @Jay Hinrichs is correct and they've found people who are willing to overpay for whatever reason.