With a small, local bank still holding a mortgage and now an REO, you might have a shot, but these are so rare that they're not worth the trouble to try to find. 

Visions of Slumdog Millionaire shot through my mind.

I figure I give it a shot since im able to make other people money.

@Juan Francisco yeah that makes sense actually...if the situation is the seller needs to get rid of the property or face being bankrupt then it it worth the shot for then to do a subject to type of deal 100%

If it is a smaller bank they you may have a shot at finding the right person.

Taking a shot in the dark before I read any comments, to see where my own head is at regarding investor psychology.With the 1 unit already rented, it looks like your coming out of pocket $1,150/month.Plus $1,400 in SL and Car NoteYou have $20k in free cash that's not currently earning anything, but has the potential to earn $1,300/month or $15,600/year.That would mean your RR on the $20k would be 78% if you do the necessary upgrades to rent the 3rd unit.The $1,300/month also means you'd be living rent free with a cash flow of $150/month.

BUY quality SINGLE FAMILY homes SFH.that appreciate.4.Always do a home inspection using a certified home inspector ( with utilities turned on) and separately  hire an A.C. company to thoroughly inspect the state of the HVAC ( it might be blowing cold air today , which passes a home inspectors test) but the coils might be shot and the system riddled with leaks and crushed air handling tubes.

Ha ok so I'm kind of ruling out the 600k property unless maybe someone who has the house paid off will accept a low offer with owner financing, kind of a long shot though.

By giving them this option, you are giving them a shot at owning a home and helping them build payment history at the same time.

I am 23 years old when I stepped in RE I knew I had only one shot at building my personal brand and one thing the owner of Bolthouse Homes John Mathewson always told me was to find how I was going to bring value.