If we went with traditional investor financing were probably looking at tying up at least 60k just to purchase the property, not to mention the rebuild costs.

It is the difference between your adjust cost basis (acquisition +improvements-depreciation) and the net sales price.Your choices for tax mitigation on the sale while staying an investor would be a 1031 exchange. 

Folks seem very willing to dramatically pay more in these “affordable” markets in a feeding frenzy fueled by cheap mortgages and limited choices for house hunters.

For example, now, with interest rates as low as they are it might not be a good choice because when you go to refinance at the end of the initial period you might have a hard time finding as low of a rate as you could today, and thus you would've been better off obtaining a fixed-rate mortgage at today's rates.So, I feel like I don't hear about this type of structuring a lot, and I'm wondering if I'm missing some things that I would only know if I had experience doing it (i.e. how hard it is to refi out of the ARM, or realistic rates during the initial period), or that I'm just not hearing about it now because it's not as appealing giving interest rates today.

Other alternatives are selling the property to purchase a stick built rental,  something that will appreciate more and qualify for traditional lending.   

Traditional owner occupant mortgage with 5% down How did you add value to the deal?

If they still are silent then you have no other choice but to go with eviction.

While Indianapolis and Cleveland are solid choices, maybe consider some other markets such as Houston, San Antonio, etc.Would love to connect!

This may make your choices more clear.1.

If it was an aesthetic choice of the previous owner, it was a costly one.