If a contractor is so broke and can't deal with a 1/3rd down then I wouldn't want him because he is "robbing Peter to pay Paul" and it will eventually catch up with him. 

Here's our catch 22: We can't sell all the buildings for rock bottom because we would make MUCH less income.

As I am getting started in real estate investing, I want to make sure not to be trying to play "catch-up" starting on day one with keeping my books up-to-date.

New housing starts are up, but it will be some time before supply catches up with demand and I don't see any new multifamily development in Montrose presently.  

or simply it's refinancing for a reason that clearly I am not catching and is over my head.

You can catch up here: https://www.biggerpockets.com/forums/223/topics/217842-closed-on-250-apartments-in-houston-texas-yesterday-2-lessons-learnedhttps://www.biggerpockets.com/forums/223/topics/294621-closed-on-155-units-in-houston-yesterday-3-lessons-learnehttps://www.biggerpockets.com/forums/223/topics/316836-closed-on-320-unit-last-week-6-ways-to-break-into-the-bizhttps://www.biggerpockets.com/forums/223/topics/35...As for this deal, the lesson learned is simple. 

One could argue that this is not even worth the paper work it costs to do especially on a monthly rate of $1200 - $2000 range, but I really don't want to build expectation and if you have a good tenant and you don't raise rent for say 4 years and you are still charging $1250 and your competition are now charging $1550 it becomes VERY HARD to sit down with no rent raises after so many years to have to raise $300 rent because you are now so far off, or have to try to catch up with an incremental raise of say $50 or $75 and knowing you will never catch up. 

BTW, some schemer in Dallas is offering to sell you mineral rights, but they don't really own them, it's my understanding they are trying to catch this old woman crook, so if you get offers call the TREC or authorities. 

Can someone tell me what's the catch with HUD homes?

You want your lists (notice that is plural) to catch as many potentially motivated sellers and to waste money on as few non motivated sellers as possible.I would send to ALL absentee owners.