I'm an associate broker at HomeSmart.

@Michael Seeker Thanks for the heads up!

There are local association, state and federal and insurance often over $1500 on top.

So, for example, if I wanted to make it as simple as possible meaning no balloon and no down, would this situation make sense:I purchase at $38000I set repayment period at 5 years based on a 50k future assumed price.I set an interest rate of 10 percent (these are all just hypothetical mind you)50/5 = 10k a year in payments from tenant10k @10 percent interest makes it 11k a year in payment11k/12 months = 917 a month So after 5 years, the house is theirs and I have made 17k (minus associated costs).

Do you belong to the East Bay Rental Housing Association?

Through a resource, I saw this was headed to foreclosure and from what I understand I could have gone to the home owner and attempted to settle any payments (mortgage, tax, etc) to obtain ownership.

You've plugged into all the right resources on BP and Youtube...I agree with previous posters that connecting with your local Real Estate Investors Association (REIA) will give you face-to-face contact with a network of folks with great experience and wisdom. 

I love real estate and want to jump in head first since this is the first time everything is paid off no debt except for this house cash on hand (50-60k to invest) ....

Obviously you'll have some costs associated with the HELOC, and you want to be very sure you can sell your existing house quickly (if cash on hand is tight). 

I'd give them a heads-up that you'll be raising rent when the lease expires, however.