Going in I knew it was tenant occupied but on a month to month (but paying weekly) and it was a fast close and typically I deal with any inherited tenant situation while still in escrow and have some kind of contingency/agreement in place for that but I bought through a wholesaler this time and it was basically a no contingency deal.

For your language then, for scripts - We typically get you cashed out either way and many of ours are appraising significantly higher but what's the worst case - you and I come back and renegotiate. 

Typically when I hear about other investors speaking with motivated sellers its in regards to wanting to get out of the home BEFORE the foreclosure process happens.

But, unless I'm mistaken, you typically buy for cash right there at the auction without a title search involved, although this may depend on location. 

Expenses on a rental property typically run 40% to 60% over the long run and that does not include your debt service.

I have not, but many localities have programs for residents if your income is low enough, typically I would expect that this would only apply to a primary residence. 

The selling agent made a big speech when I met her last week about how people who rent rooms typically don't have much money (no kidding).

Their jealous of the Chinese guy who owns the building and they want to take a shot at you.You wrote:"My insurance company sent me a special message and warned me not to rent the house to the tenant with 6 types of dogs, pitbull is one of them"And if you go against the terms of your insurance contract they may cancel your policy, and that's going to start a series of other problems.Take a stand NOW otherwise you will be vulnerable to such attacks in the future.Let this PROBLEM be an OPPORTUNITY for you and ask people here for a good PM.When you get a few people to interview present THIS issue and ask them to advise you:1) right there on the spot.2) in 24 hours, ie after they've been able to reach out to their own sources for the best way forward.W,

Or can I follow the typical, "I buy houses 1(XXX) XXX XXXX // Fast Cash Offer // 30 Day Close".

Typically you get more rental income per dollar spent (at least in my market), plus you would gain some efficiency with multiple units in a single location.