What is the procedure they have to go thru to see that it is not fake?

They CAN become a passive investment, but only if you really get the processes/procedures down.

I can find lots of opportunities for $100k houses in Florida, New Mexico, Texas and other southern red states with low regulations and lots of sun and heat. 

That seems like a rather ambitious way to get started in real estate - new development, of a type of property/residence in which the regulations and zoning are unclear.

It doesn’t have to be scary, but you do need to follow the regulations very carefully.

“He may go to court and find some error in the sale procedure,” said Gary Singer, a real estate attorney who writes a weekly column for the South Florida Sun Sentinel.

My lease states that the water utility bill, while in my name due to city regulations, is their responsibility.

Converting it to a short-term rental may be an option, but be sure to check into local regulations before you make any moves in that direction - San Diego has pretty strict regulations (and your condo HOAs might forbid it) so know what you're up against if you're thinking about going that way.

And appreciate the regulation plug, i read it as... if a SFH, and outlined in lease, can have snow removal tenant responsible.

There is nothing wrong with this strategy as long as it done in accordance with SEC regulations and does not affect your returns.