Another disadvantage is by not closing, in the name of a LLC, you cannot take full advantage of the Federal Tax Code and minimize your Tax Exposure. 

I even had my cashier’s check ready to purchase a sweet foreclosure at a heavily discounted price.

It sounds like a SFR that was converted to a duplex.What is required is governed by your state and/or local building codes and rental requirements.  

I saw an episode on HGTV regarding a Tiny Home in Naples, but wanted more information regarding building codes, etc.

you could become an agent yourself....Realizing that people always want a discount before anything happens is a reality.

It is up to a bankruptcy trustee and judge to accept an offer.Here's an article I found: http://www.findwell.com/blog/buying-a-home/buying-...As far as seller receiving money from sell price higher than payoff -- my opinion is if the house is foreclosed upon, and the property has little value other than land component (highest and best use a house tear-down), there is no guarantee the bank will sell the property for the full value of his payoff, especially considering the bank could sell to an investor at a discount, such as you were offering.  

Whether that affects real estate investors like me I have no idea, because I buy distressed discounted properties.

We're offering discounted rent, no security deposit and no last months rent to the employee so we can get them housed.

I'm not saying one is better than the other, and I sure as heck am not saying that one is "always" better than the other as some would, but I am saying consider the entire return over the entire life of the investment vs the risk.Entire return is cash flow + capital gains, projected into the future then discounted to the present value.

This may vary with local codes, but I'm quoting the Federal HUD standards.Additionally, the window must be an "egress" window, which means that a fully equipped firefighter with a air tank must be able to get through the window, and occupants must be able to escape through the window.