But, its still a foreclosure --- all those issues still apply.Good luck.

In regards to financing, there is no issue getting financing for a new construction modular project- These are my steps: buying cash, getting a hard money loan for construction, building the homes, getting an appraisal (should be the same valuation as any other property) and finally taking a proper 30 years finance.

At foreclosure auction, no other bidders met the full credit bid the lender required and the property "reverted" to the lender.Said lender now owns the property on its books, which was formerly a mortgage asset, it used to be termed OREO ("other real estate owned") by bank auditors because these were not assets intended as buildings used by banks for retail offices, etc.A lender that (now) owns a property inherits all the senior liens, if any, as well as property taxes (both current and delinquent) as well as the ongoing issues with possession and maintenance. 

It was a large flip project (original budget was $110k renovation costs) that went way over the planned rehab time as I had many issues with the GC I used.

You'll need to be more equipped, you won't be able to handle a capex and tenant issue in the first 12-15 months. 

in NYC some owners are known to rent out their semi basement which is on a grey side. so during inspection would that cause any issue?

@Michael Willis, Hey Mike,  I just did a quick scan of some old posts and as of a year ago the company was issuing K-1s which indicates that there is an entity that owns the land/project and the investors have an interest in the entity. 

So this is why this strategy is coming up so much one because of why you want to do it taking over low interest loans and when markets start to have issues and owners have financial issues.the KEY is finding sub too ANY EQUITY a lot of folks doing sub too will over pay just to land the mortgage to me thats not a good bizz model every deal we did could be flipped day one for a nice profit. other wise we passed. 

I was born and raised in San Francisco and ran into the same issue trying to find investment properties when I started.

The code enforcement officer said he mentioned these issues to the sellers and the sellers' agent.