After repair value (ARV) less the cost of repairs (estimate high here because you have not been inside or had the property inspected) times 70 percent is your maximum bid, per the generally accepted rule of thumb. So if the house is really worth $40k, and the accurate estimate of repairs is $15k, the difference is $25k. Your maximum bid would be 70 percent of $25k, or $17,500. That's the MAXIMUM bid, and it's based on accurate information on the value when the work is completed and the cost of repairs. If you have not done this before, your estimates may not be accurate.
If this is a drug and gang infested area, the property may be close to worthless. It may also be uninsurable.
The on-line auction sites, such as auction.com and hubzu.com, tend to set high reserves and the properties seem to sell for high prices. Banks have figured the process out and have control, so bargains do not abound.