@RJ Jackson, looks to me like you'd be in danger of MAKING money with this one!

@Susan Herschell, what @Julie L. describes is very dangerous for the lender.

I'd NEVER do a buy and hold in an area like that, but making money off a flip is awesome in such a dangerous and highly burglarized area.

Legally, there is a big distinction.  

I think I understand the distinction you are making.

The wiring originally installed that house was designed to run a few light bulbs and perhaps a radio or two (it's not uncommon to find a single circuit per floor or only 2-4 for the entire house) and not to handle today's array of electronics.The house of that vintage, the presence of asbestos in its many forms (pipe and duct wrap for the heating system, possibly mixed in plaster, floor tiles, exterior siding, etc) is a distinct possibility.Where I do not have experience is in local insect damage - I know you have termites and undoubtedly carpenter ants (or a close relation).  

I have done hypothecations of entire notes.. this gets you to the same place and same security but does not fractionalize and thereby create a security ( which is above my pay grade to know if it is or not.)I think the bottom line is though buying non performing NOTES especially seconds on owner occ properties is a very advanced investment play and very dangerous for the beginner.. who does not have a good basis of RE knowledge going in..

I'm with Ryan Dossey on this, unless the appliances don't work or are dangerous, don't replace them until they break. the only real exception I can think of is if your renting a higher end property, though from the way you describe it, it's probably not. 

It sure does have a distinctive smell that lingers pretty far.  

Turn key is a euphemism .... or a coined termthe question is :::do you buy a rental property that has been recently rehabbed and there is a brand new tenant or are you going to put a tenant in it.Or are you going to buy a home that needs work Major or minor and do it yourself.. its funny how this distinction gets lost..