This is a classic case of walking over dollars to save pennies.

@Don Harris  this case you posted is a classic  SUB TOO equity skimming case.and why I always say SUB TOO for the seller is extremely dangerous and for beginners with little money and they do this it can get them in hot water like this guy as well.start defaulting on a bunch of SUB toos and you WILL have a problem.. some do it intentially IE get into contract rent house skim rents never pay on first.. knowing they are not on mortgage until bank forecloses them out.

I would also be extra diligent in screening because you are at risk of taking anyone to fill a vacancy, which is a classic mistake.

To me it appears to be a classic investor value trap. 

I have a deal in my pipeline that is a classic situation of an older person passing, heirs wanting to sell quick, property being a mess in terms of clutter, never updated, full-gut kinda job.  

Agreed, buyers are most often looking for the classic 3/2 although here in Florida with the snowbird factor and empty nesters/retirees there is probably a larger market to sell 2 bedroom homes than other places

Probably original hardwood floors, beautiful classic design.

Most housing that cheap is going to need substantial work and is excluded from classic lending products.

@James WiseundefinedThat is a classic! 

I've hit the classic 'door barrier' (I'm at 6 buildings and 18 doors plus a principle residence by a combination of bank mortgages and LOC funding.