However after analyzing many 4units, they have mostly been negative cash flow even if I purchase rehab properties.

So, while you can get twice or more the average nightly rents per unit (or even more if you are renting out individual rooms) if that also comes with 20-50%+ vacancies then that could easily negate any gains -- and then you'll have the added headache of greater wear and tear and the cost to turn over the property multiple times per month.

With the current mortgage, there is negative cashflow, and because of the low equity, I don't think I woul be able to refinance without putting in a considerable down payment. 

I thought about making a subject to offer, but based on his PITI payments and the rent I could get in the area, I would be looking at negative cash flow after all my expenses.  

Not that I want that to happen I would definitely work with a real estate investment broker or realtor and make sure in which ever property I invest in is worth it. 1st comment- Get rid of those negative thoughts about bankruptcy and foreclosure.  

That is a big mistake for HOA/COAs to accept.The Community Association Institute (cai dot org) is the advocacy group dedicated to this concept.

I ordered several amazon books, the most helpful in getting general concepts of multi family analysis so far has been The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges.You have more cash, so you could likely make a play well before me, however...My point is not that you should get lost in analysis, but that you should analyze dozens and dozens of properties before you actually make a play and are confident in your numbers and particular strategy. 

A negating technique would be to start off and ask the owner why are they selling, once you know this you can have a better idea about the seller - the property, their urgency to sell, or not. 

It is unfortunate that not all sellers are truthful or forthcoming about very negative information a truly honest person would be forthcoming about.

even at that I have to put 5 to 10k into them just to get fair market value out of them then take sales commish.. and of course you can't sell a home retail in most markets with tenants in them.. so you have negative cash flow for 6 months during the sale and close cycle.. and there you go 20 to 25k to exit..