So, if I were to put myself on the other side of the equation, and someone without any experience came to me to ask for money with a real estate proposal, why would I give them money to do this?

This is where your mortgage comes in to the equation.

This, in my business, equates to money savings as time = $ for me.Nothing wrong with either approach, hands on, or hands off.

Dont forget to factor cap ex and delay maintenance into the equation I see this bite alot of people.

The bottom line is you need to finish the equation and know your acquisition cost (80k), rehab expense (20k) and the after repair value (ARV...130k as an example).  

Below are the annual property taxes for the house from ZillowFewer entries2010 $1,693 -- $163,713 -0.2%2009 $1,693 6.6% $164,103 2.0%2008 $1,588 -- $160,886 2.0%2007 $1,588 1.3% $157,732 2.0%2006 $1,567 -1.0% $154,640 2.0% Question: Should I base by bid on these rates which equates to a current market value of 140k?

Also, the tax assessed value and what the house last sold for should not really factor into the equation at all.

Do flippers also run their offer through the .7 minus repairs equation?

An REO does not necessarily equate to a bargain.....they want top dollar like anyone else and there is no pressure to sell quick. 

Once I get the cash flow to the level I'm shooting for, I'll most likely venture out elsewhere to start building the net worth part of the equation a little faster with more valuable and (potentially) more appreciable properties.