But only you can answer what your time/effort is worth and the risk of spending the extra money only to get the same appraisal.It sounds like the bigger additional cost are the extras that THIS bank is requiring you to pay upfront.

Do a risk assessment of these factors, then develop your strategy.You will have a stabilization period with possible negative cash flow, but once you get through it you will have a much easier time with your own tenants and lease. 

I already see seasoned investors becoming cautious and less adventurous in their risk taking.

I know there is a lot of risk there, especially today when banks are getting tighter.

The higher the risk the higher the reward.

I understand there are risks involved, but I feel it would be minimal since I’m only looking at using around $80k for the rental purchase.

Most bigger insurance companies don't want to take on the risk. 

But really, What would have happened had the seller not carried the note?

There's always the nagging thought that they could turn out like Brentwood Forest where they force more owner occupants, but I guess that's a risk I'm willing to accept.I think they're a great investment ESPECIALLY when there's a mix of sfr, multi, and condo (and condos in different condo associations). 

I do not see any attorney or CPA wanting to take that risk.