I was intrigued with the prospect of buying distressed properties in bulk quantities and finding local investors who could rehab them and put them back on the market.

Its a tiny loan for any institution.You'll have to get hard bids from a local GC, but maybe $110/ft?

It is already off putting that I could not be allowed even to use a tent or trailer, RV, mobile or tiny house even temporarily.

Try typing Colorado tiny home companies there are more than a few just vet them and compare prices.

As for tiny homes, they aren't considered real property and don't add value to the property.

Drugs, domestic violence, refusal to pay their tiny portion of the rent, moving in extra tenants in violation of their lease, terrorizing their neighbors and us. 

They are usually marketed as a "scenic getaway" or "tiny house retreat."

Does anyone invest in tiny house lots?

Nothing tiny (no legos!).

To answer your question specifically, look for loose or curling shingles, discoloration, particles stripping from the shingles and falling in the gutters (they look like tiny pebbles), streaking, or roof leaks inside (a very late sign).