Purchase Price: $400,000 with 5% downCurrent Market Value: $465,000 (selling directly to tenants will involve no agents)Current Rent: $3000/monthWith increased property taxes over the last 3 years, our monthly cash flow is down to only about $90/month factoring in vacancy and maintenance. 

Understandable...With Rentals, you get all your income "Tax free" through out the year, as the gov. doesn't touch it. ( example $1500 rent x 12 months, looks like you made 18k )   But then it's time to PROVE that you didn't really profit  18k.. subtract the obvious mortgage, and then factor in repairs, depreciation, and anything else you can do to chip away at this...So maybe your bank account is up $ 200 / month in cashflow.. but not after repairs.. maybe you only made $25... on paper :)

I find that is a real rarity in foreclosures, and in several hundred foreclosures, I had precisely two clients damage the property to any significant extent.I saw you received some advice about considering the environmental factors in your foreclosure resolution. 

I like that conventional loans let you factor in the estimated rent into your approval decision but starting out I can't afford 15% down payments.

Nope theres a ton of factors on a building like that 

A lot of factors to this question but what interest rates are you seeing now for non-owner occupies 30yr fixed rates?

There are many other qualifying factors that could impact you qualifying.

Plus other factors of course, but those are 2 big ones for me.I have contemplated this same thing with some of my free and clears, especially in this low rate environment.   

A PM would likely charge you 10% on a management fee but would likely run more like 12-14% of the monthly rent after all other factors (tenant placement, etc.) that's about $162/mo. for management which would leave you about $63 in cash-flow.

While the cash flow is good, it's important to factor in your business model.