I know the Kansas City market well and can tell you that these $45K properties are going to be in very rough neighborhoods with a lot of tenant issues.

The 1099 generated for the forgiven debt can be a non issue...if it is owner occupied, and done this year, the taxes are waived. 

@Jonathan West - If the purchase agreement doesn't' require a copy of reports, then it should be a minor or non-issue, just ask for the $ back and provide a copy of the report after funds are returned.  

I think Texas is a very tough buy and hold market because of escalating property tax's foundation issues and herd mentality of investors creating demand that would not be their organically.

@Rez Cury taxes is the main issue, plus contractors seem very unreliable

@Russell Brazil Thank you for your feedback and based on your statement knowing how to work with an appraiser shouldn't be an issue if you present yourself as a professional and respect the process.

I want to know if there are folks here on BP that have been doing this and so what are the pit falls, and implications on tax and other legal issues. 

We have people ask for references and do their research when they are consider using us to manage their properties, and have no issue giving them what they need to make an informed decision.

There are legal issues in Calif when attempting this approach.

Idk if it's even legal to evict for that but I've literally had zero issues.