The increase exposure on E&O is the main hurdle. 

I oversee a ~1.4 million SF shopping center / retail portfolio and from my experience here are some things I see that may help increase your odds of landing a higher quality tenant beyond the basic demographics (income, population density, etc):1. 

Every new investor was always tentative to start with and just did a small amount, but as the returns kept coming in, and they became comfortable with the process, they would gradually increase their investment over the next year or two.  

Are they looking to reassess the property for an increase in taxes possibly?

Only difference is increased bonus depreciation on equipment, but the theory and methods for everything else remain the same.

A 20% down payment would make the mortgaged amount $160,000 and your monthly cash flow would increase by about $108.  

Delinquent HOA assessment not paid by the foreclosed owner is a common problem that becomes the burden of the new Buyer, who has to settle with the HOA.Do the (sometimes) excessive HOA back dues increase the Cost Basis of the property that can be written off against ordinary gains or does it expense out (as passive income) on IRS Schedule E?

I'm not sure I like the idea of charging rent for each spot as this would assume you may be able to increase rents which may or may not be the case. 

What they're wondering is if they could sell their lot to the same developer who buys the tear-down, allowing the developer to get extra value by increasing the lot size.

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