Stepping it up a bit and moving from buy and hold to flips. 

Has anyone had any success contacting the asset manager of a bank to buy an REO property? 

Which do you think will be more competitive, buying from wholesalers or your own referrals?

There are some exceptions, but they are rare, they have access to funds, and they typically built their empire when the timing was right and got lucky.Likewise, it's not often that you can buy a house and sell it for big money six months later.

I don't even know how the flippers buying them are making money.  

Buying small dollar non-performing notes and working (hard) to get them to reperform is a good way into the business -- if your friend has the time.

@Jason Hallett If you're just buying RE outright and not remodeling, adding value, or forcing appreciation you will run out of funds. 

The particular place I have in mind has a 1 acre lot and the house probably needs  $60k to work on it (this was guesstimated by my coworker who wanted to buy it).

And if you are buying a property with them and will be renting part of the property from them that too is fine. 

Quote from @Tara Davis: Hello, I have been educating myself on mortgage notes, an I am ready to buy.