If you have one where you are netting $100 a month but have to be in regular contact with the owner as well as mitigate the inevitable problems that arise when then interact with the tenant directly, the juice is just not worth the squeeze. 

this, as opposed to going to a private money lender or hard money lender who is probably using an insurance company or other people to get the moneyI've never really tried to myself, but in my mind, it makes more sense to go direct to the store, as opposed to going through a middlemanI'm not sure if this works or if they only work with banks and lenders.

Working directly with sellers is the bulk of the equity capture I need at the buy.Look for tired plexes, carpet and a dumpster in the driveway, yard/moving sale holders, places for rent and to your circle you deal with regularly. 

Should I get an electrical inspection done outside of the regular home inspection since this is an older home? 

If both are at low rates and your credit is good, I would save and buy a rental instead of paying off the loans (obviously continue to make the regular payments). 

Our regular electrician says $6K - $10 to do a house.

You only get what you are owed.If it goes to bankruptcy it STOPS foreclosure process as they try and restructure the debt and go back to regular payments potentially (depends on type they file)To be blunt if you never have bought a note before buying a non performing commercial note would be like handing the keys to a tractor trailer to your 16 year old kid and say go drive this as their first car they ever drove.

@Bryan Walsh, nice way to think outside that box.You would have to shop that around, and you might want to find some private money rather than a regular HM lender. 

https://www.biggerpockets.com/store/estimating-rehab-costs-ultimate-MB

I was told that the Northwest area and the Southwest area were the highest in terms of rentability and desire for people to live at due to convenience to schools, stores, and nicer living.