If you are buying a non-performing note, then you are going to weigh your costs and risks of foreclosure, costs of foreclosure, etc, and come up with a comfortable discount.  

I currently have been investing in foreclosures for creating rental income.

Pull your free credit report at annual credit report.You want your credit card's to be no more than 10% of your max limit.Paying bills on timeCredit inquiriesThose 3 things make up a good percentage of your score.I would be happy to help you if you need it.I have been there done that and I have the T shirt.Long story short I lost my house to foreclosure and went from a 750 down to below 500. 

If it's simply a contractor or sub working for an investor, they'll love the opportunity to connect you as it could lead to another project for them.Also try networking at your local foreclosure auctions (assuming that your county hosts in-person ones.)

I bought my house August of 2011 as a foreclosure for 85,000.

The only thing that we could make work would be buying foreclosures or a property that needs work.

For example, say a home sells very cheap in foreclosure, that number will drive the Zillow number way down, then you turn around and sell it for more and it goes way back up. 

Don't do foreclosures in Washington, they changed the law where it is now illegal to even solicit foreclosures. 

In the mean time any other ways I can find distressed properties or pre-foreclosure?

What liens are wiped out at foreclosure?