There is both physical distress ie. run down property and financial distress; someone who can not pay the mortgage or taxes for example.I think what you are asking is "Why buy a fixer upper property when the cost to fix it up is as much as the house is worth when you are done?"

Specifically: Property condition - properties in poor physical condition, that have code violations, or structural/pest issues are viewed poorly by lenders.

Even though i physically took in $90k from the sale of real estate in 2017, my taxable income is $20k.. which by tax returns alone, looks like sh!

And when you look to invest next a specialized lending product like a DSCR based loan might work well for you. 

Not all banks offer the same product.

. - A productive member of society who was once a court date away from being a convicted felon. 

Either product would be a good and inexpensive choice that would save you the time and headache setting up a site yourself.

Meet People with Experiences Similar to Your Own: There are many organizations (both free and paid) out there that you can join such as BiggerPockets forums, local real estate meetup groups, The Entrepreneur's Organization, your local AICPA group, etc. that gives you a place to receive advice, guidance, problems and ideas.Utilize the R&D Tax Credit: Your business could receive a 10-20% refund for employee labor that’s associated with improving a product or process.Utilize Employee Retention Tax Credits: If your employees that worked for your business during the pandemic are retained through the end of 2021, your business could receive up to $9,000 each quarter that your employees were retained.Own Your Own Office: This would allow you to have multiple tax deductions, utilize depreciation, take advantage of appreciation of the property, as well as allow your company to rent out any unused space to help pay the mortgage.Take Advantage of Energy Efficient Tax Credits: There are many opportunities to take advantage of these credits such as updating the HVAC system, installing energy efficient lighting, etc.Perform a Cost Segregation Study on Your Property: This would allow your business to immediately write off the personal property within the building.Utilize Work Opportunity Tax Credits: If you hire employees from groups that typically face a barrier when it comes to employment such as people with physical or mental disabilities, veterans, etc. your small business could receive a tax credit while also helping the underserved.Use the SCORE program: This program is free and connects you with resources, and mentors and specifically focuses on helping small business owners excel.

This is not a Fannie Mae or Freddie Mac product, so the odds are it won't be main stream.

With a rehab budget under 35K, you could look into a streamline renovation loan product.