I've heard being classified as a "real estate professional" (ie 750 hour test) will avoid cap gains tax.

I have a private equity firm that purchase MHP 3 star or better likes seasoned MHP with 8 cap or better.

He was finding it difficult to find homes that would generate cash flow in that area (as you are) so he decided to build.

Is it difficult for contractors to get a good list of references, or do most of them not plan to be around in 5 years?

The difference is that you have an understanding of the operating expenses and they don't.It is difficult to find rentals that will cash flow in almost every market.

Not sharing wet walls, electrical spines, etc make it more difficult.

You are looking at 4 or 5 cap rates in many of these markets on a retail side and 6 or 7 maybe 8 or 9 on a wholesale side.

Can we even find a liveable HUD/foreclosure and how difficult will this be?

It would seem to me difficult to become an expert if the area is too large- How exactly do you 'go out there and look' at properties - Do you suggest actually finding out what properties are for sale and going to the property to at the very least look at the outside but possibly also the inside if there is an open house?

That is why assessed values are too difficult to use to judge a homes value.