The problem is that they require constant supervision, turn over more frequently, and tend to have higher turnover costs.At the same time, this isn't the greatest market for flipping when everything is selling for top dollar and material costs are high.

For example, I just did this with one of my tenants to cut their lease short midway through and paid them one month’s rent ($1850) to help cover moving costs and the premium on a new lease.

@Paul Clements so what happens if you go the rough all the effort (time, dollars, etc.) to get property ready for buyer and they decide the property doesn’t work or doesn’t pass tests, etc?

Put every dollar you earn into the HELOC until you need to use it to pay bills.

@Aaron Dranoff Unless you're flush with cash (based on your profile pic you could be) I'd spend literally ZERO dollars doing the things you described.

A demolition is a disposition for zero dollars of consideration, and I am comfortable with the position that if a dwelling unit is demolished or destroyed, and the subjacent land is sold thereafter within the time confines of Sec 121, the land qualifies for the Sec 121 exclusion as long as the prior dwelling unit would have met the ownership and use requirements under Sec 121 notwithstanding the demolition or destruction. 

Also, this home along with my other rental is depreciated, that means my real estate company, on paper nets zero dollars..... so unto $80,700 worth of stock market capital gains and dividends - are taxed at a 0% rate.  

I have lived with $99 dollar spec toilets and literally never clogged one.

The million dollar question (quite literally) is- what are your numbers/budget? 

If it is impossible for you to look at the property prior to purchasing, you MUST have trusted partners that can point out repairs/concerns and estimate (in dollar terms) the remediation plan.