Not to say that money can't be made but personally I believe that people are more considerate of their utility usage when they have to pay for it. 

As a precursor to that goal, I am currently loving teaching business basics, and mentoring, and spend a considerable amount of my free time doing so!

That should naturally play high into your considerations.

I'm also wondering why it may not have been put on yet... is it possible HUD is holding onto it until property values rise enough to recoup their loss?

Owner occupy is a way to go.And since you have family in Texas, you should really take in consideration checking out the market there!

Also adjusting for current condition- you can also take into consideration what property is selling for per sq ft to help give an idea.

That's not even taking into consideration other expenses such as utilities.

Another consideration is what kind of peppery you are targeting.  

Also the deal size you are talking about.If you have say 100k to work with then small balance retail condo,office, or say an old town building might work for 100k investment.Those type of properties you have to work harder for yield.My clients tend to buy properties in the millions to tens of millions in price so cash flow is a consideration but secondary usually to passiveness of the asset, equity growth long term, and high quality location for wealth preservation.   

While I generally ignore appreciation in a purchase / property analysis decision, I'm very confident that these home values will continue to rise.