Tenants in place make it more attractive to an investor. 

Remember, the quality of the asset will provide safety and affect your return over time by reducing turnover (cash-flow killer), attracting a good quality tenant, and giving you an opportunity to exit (sell) the deal in the future. 

The latter, I believe, may continue to gain momentum as it gets increasingly difficult to attract and retain talent given the high cost of living in the Bay Area.

That is at least half the attraction to this product type:  You're able to buy cheap distress properties.

@Jesse Fernandez lenders are assuming you will refinance with them, and they normally will make it attractive to do so.

You could probably get a loan from a bank and offer the 150,000 without seller financing and have a more attractive offer as well.

Hi Looking for exciting investment opportunities for a passive stream of income .For background I work for a global investment bank designing and managing market linked products.I have made two rental property investments close to NYC Metro area but the rental yield isn't that attractive as in other up and coming parts in the country. 

I know quite a few people who do exactly what you are talking about and yes being 4 hours away has its challenges, but the cash flow you can get in these areas is very attractive.

It would definitely be a quicker turnaround time if you got a condo/apartment, but you will also probably attract lower quality tenants as well.

Not all low cost sfh’s are in bad areas attracting bad tenants.