The lender will look at the appraisal to determine fair market value and debt service coverage ratios to determine the qualify of the investment. 

Then once you contact the owners, you can sign a contract with them that says you will make up their back tax debt in exchange for their house. 

You make money holding Real Estate 4 ways: Cash Flow, Appreciation, Debt Paydown, Tax benefits.

There's been classes on it and everything else but when no one tells you how litigious a sub to negotiation is.If you go in and get a property under contract and take it subject to the existing debt and then you flip that out or you make money on it and the owner gets wind of that they can come back and sue you.

If you are able to self manage then you're eliminating that 10-30% management expense for yourself which makes it look good on paper - but remember to account for your time and effort to make it successfully work.

And heaven helps you if you finance that thing at the high side of the market because then you can't service the debt and you're dead in the water and you start bringing money to the table until it erodes through your entire savings 401k everything you got in savings because you believe that the market's gonna correct.

The house is worth conservatively $400k (with no debt on it) - rent $2400/month.

With such a head wind coming from getting a commercial loan you may want to look at non-qualified mortgage products like debt-service-coverage-ratio loans or possibly a HELOC.

My FICO is around 740(2) Since my debt will increase significantly after the refi, I would assume that leveraging further using the $400K will be more challenging (and risky). 

Fanny/Freddy are out - already have 10 mortgages.  5 were just refinanced - not enough equity for cash out but lowered the monthly debt service by about $800/mo.