What's to stop a person from going into a bank and claiming they intend to live in the property then once the financing is through, setting up tenants and moving on? 

Now the idea is to buy said house and burn it to ashes and claim insurance money to build.

One BP member contacted me offering a property under 60K claiming 160K ARV and 40K rehab.

We heard about FIRPTA, we will pay for property taxes of course but 15% withholding still sounds very high - any way around it or is is easy to claim it back if we have taxes paid?

And as a non-resident foreign national I don't believe you could claim this anyway ( good accountant who works specifically with foreign nationals will be your best friend right now).  

But I'd make sure I could defend myself in small claims court which may be difficult without a lease unless anything you withheld money for is glaringly obvious.

Have you needed to hire an accountant to figure out the ins and outs of claiming your own rent as profit?

But if you're saying that the owner needs to actually be involved throughout the short sale and that the bank won't respect my quit claim deed as owner, then of course I wouldn't want to proceed.

Seller claims to be current with mortgage yet she was given my contact info by a "housing counselor" who stated that she is in pre forclosure.  

Maybe a year from now a tenant will be claiming that blablabla was broken when they moved in, and your property manager will be able to shut that back-and-forth down really quick by showing the tenant that portion of the inspection, potentially saving you lawyer fees.