If I was in financial distress and losing my home through foreclosure or tax delinquency, I would not want to deal with an enthusiastic newcomer trying to make money on my misfortune.

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Another option that I've seen in the local market is purchasing a heavily distressed or big rehab project with a local hard money lender that will allow a smaller downpayment due to the amount of equity in the deal on the back end.

You will then have a few options with that rent money....you can put it into principal or you can start saving it to purchase yet another property.

Yes you can make money in Kensington and Strawberry Mansion but does  that the type of asset and renter align with your goals?

And the GC has no money at stake, so he can simply walk away if things go badly, leaving you holding the bag. 

They agreed, including them paying all closing costs, and we had set a price in the lower 400ks… I asked for more money, which they obliged to add about 10k to, but just today they said their partner pulled out.

Then make your money that way.

So it seems to me that folks are probably happy to sit on the money making machines rather than sell.

Also, remember that interest rates are also negotiable, and the seller gets all the money from the interest.