Depends on budget really but, if you want to be in the heat of the movement, stay north, thats where the money is going. 

Down payments however, are usually 25-30% depending on the project and lender you are working with.

I would prefer to flip it but it may be my first rental property depending on the circumstances.

@Megan Bridgette,The answer to your first question is, "not hard, but not that easy".The answer to the rest of your questions is, "it depends ...".It depends what you expect from foreclosure.com.

But the competition between remaining products must depend on the market.  

I've come across a couple of properties that seem to be vacant and through some internet sleuthing I've determined that the owner is absent.

Depending on what percentage your commercial Lender will loan you against their new appraisal, the usual 70% means that you wouldn't get all your original $85k back  at refi.

The goal would be to rent weekly roughly what the mortgage costs or more depending on what the numbers are and the market will support. 

There are some non-legal considerations as well depending on what kind of public image you want to put out.

@Allen Fletcher is right on in his assessment of the actual tax being dependent on past use (actually 500K tax free is the top exclusion if you're married and have lived in the property for 2 out of the last 5 years) and future strategy (depending on your path you could exempt all or part of the tax in a 1031 exchange).Your accountant paints the current picture better than anyone.