I have found, thru a number of mathematical models I have run, that 30-70% LTV is a 'sweet spot' where rent - (piti + depreciation + expenses) = zero added tax.  

You go ahead and keep on gambling, I'll stick with the known facts and mathematics of the risk involved.There is a 95%+ chance that tank has been leaking.

BS in computer science and MS in financial mathematics - the study of math equations behind exotic instruments such as options, futures, CDO's, CDO^2 (yeah that thing that blew up the housing market back in 2008). 

Simultaneously I was reading about the business model of insurance companies (not sure why), from what I understand, An insurance company will charge monthly premiums from customers (using some mathematical model involving risk quantification to determine a premium) and make payouts to legitimate claims, Ideally there is a positive delta between the total premiums charged and the sum of all the claims paid out, That is the company’s profit.

Risk Management, tax accounting, financial reporting, financial accounting, financial analysis, financial mathematics,  macro economics, asset and debt management, business law, business strategy. 

With all that said, mathematically I agree with you.

Actually, you can make a mathematical argument for the fact that: 1.

All the successful bidders were willing to accept almost no mathematical return on the money at risk.

The longer the amortization, the smaller the monthly payment and the larger the balloon payment at any given point -- playing with these numbers allows you to adjust the monthly payment to where you need but also allows the lender to get paid long before the total amortization period.By the way, from a mathematical standpoint, an interest only loan is the same as a loan with an infinite amortization -- $0 is paid to the principle each month, so in theory the loan is never paid down (or paid off) until the balloon payment is made.

Mathematically, this is the axiom "You can't prove a negative"