I would guess they are buying non and sub-performing loans to achieve the higher yields.  

In addition to studying here on BP you should attend local REI meetings in your area to network with others and build relationships.

In addition, the federal government at the time would even give away land for free.  

2) If seller's agent was blowing smoke then walk.3) Don't waste time and emotional energy on it in addition to losing a few bucks.4) Focus on the next deal instead of the misery of this one

I can most certainly perform all of the "clean up" that an abatement company would, without being regulated by the state, for a 10th of the price.

In addition, for the ones that do make it to the market, owner-occupants face stiff competition from the plethora of investors in the NYC area. 

That way, if anything major is discovered, you'll have time to assess the situation and obtain additional inspections from other specialists as necessary.

They are performing well.Is using hard money for buy/hold purposes something I should consider?

Or buy non-performing notes...But for my $50k?

It was completely rehabbed with an additional  $150k.