I've observed my 1st target/distressed property in my city that has been vacant for a very long time.

Buy distressed SFHs when the market is down and either rent them out or owner finance.

I've never purchased a distressed asset.

I started by buying a 4plex w/ an FHA loan and moved in, then continued buying cash-flowing properties in lower-end areas of the East Bay that were distressed, fixing them up, and renting them out.

From what I can tell in the area, distressed homes sell for 30-45k and 75k would be an ARV on the semi-conservative side of what a rehabbed home would sell for.  

I learn how to invest in 50k distressed houses and make 12%+ cap rates with no maintenance, and he makes money off houses I buy from him.

They are saying I am over the line and exposed to risk; commercial sounds like business.Same way with investing in distressed properties.

I need to start advertising to distressed sellers.

Still Bay area, but lower cost, still some distress, some dumps for sure, close to Bay Area train system.  

You are right about the market being very competitive, especially on distressed properties.