Personally, I'd pay with cash or utilize hard money and obviously the market in Memphis is very different than in Phoenix, but I don't think there's any way investors could get something for that much out of pocket down here haha.

I advise that they find an area where the appreciation is obvious.  

First thing I see is you're close to hitting the 2 years OO for a tax free sale on any gain...obviously you don't currently have any gain, but if you can wait it out then any future gains would be tax free...it gives you some wiggle room later. 

Obviously waiting is not ideal with the mortgage due 09/01 but I don't want to find myself with legal issues either.

This obviously is neglecting the agent fee to get a tenant in.

My question though is does anybody see where investors should be investing right now in real estate because the numbers are just too obvious not to succeed?

The 2,500 would obviously not compare to tax deductions generated in the thousands.

Obviously we cannot force the borrower to sign so I said let’s foreclose because I think borrower is playing games.

Plus most of your wealth will come from appreciation and that home is obviously not appreciating. 

I would suggest looking into your local market first obviously you need to find out STR restrictions or permit needed.