There might be cheaper options, but it's important to remember that you often get what you pay for. 

If you get a property for $15k at auction here in SFL and it's worth $250k, you just lost your money 99/100 times.A $55 title check goes a long way.Only options you have is to rent until bank kicks you out to try and recoup some investment, if it needs fixes don't put money into it, you will not get a penny back from anyone.

Both options have their merits, but with the market fluctuations and my unfamiliarity with the area's real estate landscape, I could use some insight. 

Working with realtors for valuable market insight and contractors for scope of work might be a good option for you starting out if you don't have experienced flippers you can work alongside that know this stuff. 

It's important to explore your options thoroughly to find the best fit for your investment strategy.

Every lender can be different but there are options that allow as little as 10% down and 100% of rehab financed. 

But you ALWAYS have the option of shopping with your feet. 

My questions:- option #1: rent it out on a month to month basis until the bank forecloses with full disclosure to the tenant.

If you are looking at more DSCR type options for a stabilized property, then you can layer in market or actual rent, taxes and insurance estimates to calculate DSCR rate.

More context: I need to have a small kitchen in that bedroom so not sure how to get a permit for 2nd kitchen if the option C is the most logical.