I am interested in buying properties and maybe renting them out short term then selling and buying more properties or higher end homes.

She also told me that the only transaction that could transpire before auction would have to go through the previous owner in the form of a short sale or a bank pay off.

well assuming it meets the QM rules for owner occ.. etc.the scenario you presented is not a very attractive note unless the discount was HUGEPV is what investor look at.... what rate of return they want and in notes its usually 8 to 12% APR but with 100% leverage most investors will only pay on face value about 60 to 70% LTV ... so right off the top you would be taking a substantial hair cut.No secret what your trying to do.. but I surmise you will very quickly realize its not realistic .. the discount would be such that it makes it a no go.If your thinking someone will lock up their money for 10 years at 5% well thats not going to happen especially at 100% LTV... 

Hard money lending is more for short term financing because the interest rates are much higher like 12%

Overall from what I see it has depressed multi-family units on the small side (Duplexes and triplexes) and made it very attractive to invest in.

Otherwise, the short term fix up and flip or holding period for the expected run up on that Stock, doesn't occur and you are now Stuck with a Buy and Hold Rental or Stock, for a longer period when you can at least break even with your, now, Investment.

If you're only going to live in the area a short time, be aware that buy and sell will come with RE agent fees which might make it cheaper to rent in the short term.  

I am new to investing as well and have learned a great deal in a short time thanks to bigger pockets and all the tools they offer.

Just stay positive throughout the experience and do everything you can to make it as attractive of an offer as possible.

I am about to start the process of shopping for conventional loan rates and getting pre-approved, but am concerned if I shop too much within a short time period it will adversely affect my credit score.Does every loan inquiry during the shopping process negatively affect your credit or is there a "grace" period after the first inquiry?