If one could just follow him around and collect the crumbs they might do very well it appears.

Depends on the note as Jay mentioned, non-judicial states will be quicker but federal laws require notice, demands, collection records, modification allowances, redemptions and 120 days before you can proceed.

I've know several people in my neighborhood that have stopped paying their mortgage, moved, and collecting rent payments until they get foreclosed upon. 

Is it necessary that they practice in my home state?

You should have a statement in your lease regarding late fees being collected as additional rent and you should also state that any other charges such as the water bill will be collected as rent.

The nice part of having a real estate license is that you can collect commission income  from everyone who is ready willing and able to sell their home.

Or if you take title on a quit-claim, you're getting whatever interest that seller had, along with any clouds on that title.Most common way is to have a traditional closing that clears title and pays off any liens, issues a title policy, and gives you true marketable title - that is only encumbered by whatever you have encumbered it with (mortgage, trust deed, UCC 1, Promissory note, etc.)If you don't / can't go through traditional title (say for example, you buy at a tax foreclosure sale), I'd say it's best practice to go through the quiet title process.  

This is what I envision:Step 1: Find Property worth buyingStep 2: get financing for said project and do rehab to create equity ( 3 year term)Step 3: Find tenants that want to do a "rent to own" situation on a 2 year lease termStep 4: screen tenants and collect "money down/option payment" (somewhere in the realm of $5,000 and negotiate purchase price and get contract signed.Step 5: Hold the note for the 2 years and collect rent payments until tenant is ready to exercise, if they don't then sell the property for the appreciated value straight up and collect the equity.does this sound like a valid strategy, and if so can anyone provide me any insights into any potential pitfalls?  

He practically built a whole kitchen for his parents. 

For example, suppose some new/potential investor has a question about buying a duplex and collecting rent.