The house had a damaged roof, every drywall, the floors, the AC duct - almost every inch inside was full of mold.

Or, allow smokers in there again (with all the risks and damages that causes).My properties are and always will be non-smoking homes and grounds--- but I eliminate way over 50% of potential tenants by doing this.

We have done well, but we are over leveraged in a portfolio that I see as being 50% physical real estate, in the ideal case.While I would love to get in on the commercial game in Philly.

Even if the property is too damaged to fix up you and still try to offer something for the land.

Also, aside from any actual damage to the house, what are some of the pit falls that I should look out for when buying at a trustee sale? 

In this book it has evaluation reports, physical fitness tests, transcripts, etc.

Finally, while the county will never physically get closer to the Bay Area or Redding, and transit time from Redding isn't really improvable due to the terrain, there is ongoing efforts to make Humboldt more connected to the south.

The people we had installing the counter dripped some polyurethane (or something) on the counter and damaged the finish--it wasn't a big spot, but it looked bad.

Account Closed if you are not concerned with the physical damage coverage and could walk away or rebuild with your own $$.

If you want the property ask the borrower for a deed in lieu of foreclosure, then you will own it, the incentive for them to do that is that you can not seek any damages or amounts due from them, you accept the property, subject to any liens, as full  payment of the debt created.