Then you rent it, then refinance getting your cash back out, then repeat, sounds easy, but they left out general lending requirements because the author really isn't aware of financing pitfalls.First, your example, 150K is in a dream land, 35+35=70 with a more realistic range at that auction price would be an after repair value of 87,500, certainly not 150K as it would likely sold at auction for a higher price.

Also, I recommend the estimating book that BP has (I'm the author and many of the examples are from Atlanta):http://www.biggerpockets.com/flippingbook

I did not list the caretaker as a tenant, but I did list them as an "authorized occupant", with the relationship being "Caretaker".  

The owner has had Sec 8 tenants before and the unit(s) were inspected.I Think you need to check with the local housing authority to find these units, just as if YOU were a sec 8 tenant. 

In the eyes of the law and human rights, a tenant has the right to have anyone come into their home that they authorize to do so.  

@Gabriel Miller This is very specific to your city and local housing authority.  

I once read a book about equities/commodities trading and one of the key points that the author made that seems appropriate is that there is a huge difference between speculation and gambling.  

I advised the public housing authority in Broken Arrow, OK.

You want to find out how far away any potential tax auction might be as that could be another avenue.Simply tell the seller that X is the most you can pay for the property but you are willing to negotiate with the bank on his behalf (requires his authorization to be submitted to the bank) to get them to agree to accept less.  

Call the local Housing Authority and get a copy of their utility allowance so you know how much to deduct from the above for utilities to compute what kind of room you have to raise rents (without utils.)