I suppose we could all cheer you on and give you advice on how to "10x" your goals and flip 20 houses this year and purchase 30 investment properties, but that's like encouraging someone to jump off a 30-foot diving board after watching them belly-flop in a kiddy pool.You have one rental that has fallen apart and eaten up your cash.

I just can’t fathom (for me) going to even cheaper properties with less qualified tenants.

FHA for a place you plan to live in is a much better option if you can qualify for it,  IMOI am assuming we are talking small multi like duplex-quadplex.  

-Buyer was in the end (along with their agent) inexperienced and didn’t realize they didn’t qualify for a loan with gifted money on an investment property.

Mls fees, board association, e&o insurance, general business liability insurance, electronic key fees, licensing fees, continuing education, any fees your broker might charge, increased auto insurance rates.

Can a borrower qualify for a Home Possible mortgage if they own another property?

A mortgage is not an option for us because we would not get qualified.

Meaning that they were nowhere near ready or qualified to buy. 

So...my question is...Should i wait, save more money to qualify for FHA @ 5% or try and find a foreclosure and work on it myself?

@William E Edwards problem is we used FHA for this house and even qualified for a grant that payed our closing costs.