Is this a valid way to find distressed home owners?

I'm not exactly sure how it all works out but I wouldn't count paying down principal as a valid way of compounding money.

And if so, is the mortgage still valid? 

108 s. 36th street Newark, OH 43055Assumptions: $120,000, $4,200 down payment (3.5%) Income Rental Income- $900  Laundry- $0 Storage- $0 Misc- $0 Total Monthly Income= $900 Cash Flow Income-Expenses= 900-1,190= -$290 Total monthly cash flow= $ -290 Expenses Tax- $170 Insurance- $65 Utilities- $0 -electric -water -sewer -garbage -gas Home owner association fees- $0 Lawn/snow care-$0 Vacancy- $90 Repairs- $ Capital expenditure(roof,water heater, replace big items)- $135 Property management- $100 Mortgage- $585 PMI- $45 Total Monthly Expenses= $1,190 Cash on cash return on investment (ROI) Down payment- $4,200 Closing costs- $3000 Repair budget - $1000 Misc/other- $0 Total investment: $17,200 Annual cash flow x 12 Annual cash flow divided by total investment=ROI -3480/17,200= -0.20%

I have a gas furnace with forced air in my house.

You've got to look at your biggest expenses (rent, car, insurance, gas, food, drinking, utilities) and figure out how to cut costs and purposefully set that money aside.

Next best protection is having a valid purchase contract. 

@Steve Hall has some very valid points, but your comfort level of investing might be different from his. 

Examples: Oil&Gas, Farming, Govt contracts, Cannabis, Export/Import etc. 

I understand that there are different types of investing (wholesaling, flipping etc.) that someone can pursue, and could be a valid reason, but is there anything else that I am missing here?