We have no mortgage on the building, as we flipped a large waterfront home for the funds.

Also, you need to find a mortgage person that understands what you are doing and is investor friendly.

But on a preforeclosure whole sale, who takes care of the existing mortgage loan?

The property has a net income cash flow of $525/mo after all expense, mortgage, etc. 

Save up a down payment, get an FHA loan and buy a cheap duplex, live on one half while you fix up the other half, then rent out the nice half while you fix up your own half, when you have some equity in that property (from your renter paying your mortgage for you), refinance and buy another or buy a flip at that point.

When living in one half, our mortgage minus the rental income, will be $350.

I did the analysis beforehand taking into account the managment fee, vacancy, capex, repairs, mortgage, etc and it still came out above my monthly cash flow requirements.

I did the analysis beforehand taking into account the managment fee, vacancy, capex, repairs, mortgage, etc and it still came out above my monthly cash flow requirements.

So my strategy would be to get a 70%LTV loan and mortgage from a bank and find maybe 1-3 debt investors to finance the rest.  

Be aware that if you have a mortgage on the property, the transfer to an LLC may trigger the due on sale clause (that could be avoided using a land trust).