However, this rule fails to take into account how well the home is insulated, how well it's sealed and the local climate.

Please be sure to follow the rules of our forum when post, though.

I have my eye on a bank owned property that is listed on the MLS at 80% of market value but my offer calculated based on the 50% rule would have to be right around 50% of market value.

(Even using the 50% rule!)

Using the expenses (all expenses, including vacancy and capital items) are 50% of rent rule of thumb, your example will need rent of $2762 (I get $1381 for the payment with those terms) to be break even.

A judge may rule that the tenant didn't owe rent for the time they were living in an uninhabitable property.

I've attended some IRS foreclosed auctions...and IRS seized auctions...but I missed the latest property tax auction here...I looked at the list of properties they had...nothing to shake a stick at unfortunately.I would treat a property tax foreclosure like any other foreclosure...but check to see if there is any sort of redemption period...there might not be for a property tax foreclosure but that could vary by state law.There should be an inspection period for the property...so if you are serious about one I would get your inspector out there in advance.Also, get familiar with the auction rules...and attend an auction before you actually bid on anything.

Pretty sure the rules also apply to an investor short sale.

Non-payment is the easiest eviction case - a Judge must rule in favor of the landlord always UNLESS the tenant can prove repairs were not made.

I imagine much bigger name investors can get around some of this prequalifying but until you establish yourself you have to play by the rules and "polish your apple".