This was very attractive to me because it's a very old property (1914), in good shape but with deferred maintenance, a past electrical fire, and some other issues that are relatively minor.I had stated I could offer an owner carry.

Low prices attract problematic guests. 

That was until a lady went and took 95% of them and left 5.

Another lady was looking for her daughter, but she did ask if she could re-paint (good sign?).

(Though the arbitrage is very attractive)I'm now considering a 1031 exchange, but then (correct me if I'm wrong) I'd have to get a new loan to cover the loan I'm leaving behind...

Many OOS investors set themselves up for failure because they don't truly take the time to understand:1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.2) The Class of the PROPERTY they are buying - which is relative to the overall area.3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.7) That OOS property Class rankings are often different than the Class ranking of the local market they live.8) Class A is relatively easy to manage, can even be DIY remote managed from another state.

Conventional mortgage loans do not carry a Occupancy requirement which makes it attractive to investors. 

From what I understand their business model is getting paid by the banks and the banks so far are offering it free of charge to attract clients and stay competitive.

Long story short... tenant is long gone, place was trashed, renovated top-to-bottom, insurance covered everything including lost rent during renovations (actually netted $4K on the renovations from the insurance settlement), bumped rent up $200/mo to new/current rents and have a sweet older lady moving in any day. 

They are often not even there - they are out looking at attractions, theme parks, etc.