If someone is on the outside looking in with limited knowledge other than an occasional macro level article they read then they might perceive risk.  

It definitely would not hurt though to try to find a friend in the area, or even a member of BP, to ask to occasionally drive past the property to check it out. 

I am very interested in being a buy and hold investor, however I am not opposed to flipping occasional homes if the market is right and the capital/time seem to fit.

There isn't much out there, but people are still occasionally finding them :) 

Occasionally you might see an auto parts store.

Occasionally good deals come along on the MLS, but they move quickly.You can also try to find off-market deals, by talking to wholesalers, turnkey providers, and REO managers.

The same applies of course to the occasional vacant suite. 

Partner would be splitting cost making each down payment 60k instead of me dishing out the full 120k.

I think what U will find is your not the only one with this idea.. someone in default will over the course of their foreclosure get HAMMERED with direct mailthe bank will be talking to them sending them letters pretty much weekly. people like you will be drilling them.. so competition is fierce.. at least it used to be in our market before the laws changed.. but not everyone knows the laws or follows them.Bottom line though this I know is true having bought hundreds of these.. homeowners are in massive denial.. they are not motivated until usually the 9th hour.. you can find an occasional one that will react early in the process.. but usually that reaction is to list it and sell it.. now if your in an area that has limited sale activity to homeowners  and most the transactions are to investors for rentals.. that would be a leg up.. as those areas are dominated by wholesalers..

The person who is the good debtor will get dragged down by the bad debtor / deadbeat; when this is the case, the good person's credit report will have older years showing no derogatories but the occasional ding in more recent times, showing a gradual decline that can start to accelerate as more time passes.As a few other posts have noted, finding out their past history of paying rent is your best indicator; if they had trouble paying rent to past landlords, it can be expected to happen again.Lastly, I would add that you have to have a good understanding of debt to income (DTI) and how to calculate DTI and what a bad figure for DTI would be.