In light of that did the developers wind up getting a pretty decent deal out of this after they took a big risk on a property with crazy restrictive zoning and no clear path forward prior to purchase?

Keep in mind, it would be in your best interest to go for as high as 4 units on each purchase to maximize your door count. 

Is it better to have a willing seller and buyer before sending the initial purchase/sale agreement?

The only additional thing that needs to happen is make sure appraiser makes note of why the value increase in as is vs previous purchase price.

You want to look at paragraph 12 of the Texas purchase contract, called the 'One to Four Family Residential Contract'.

Quote from @Roger D Jones: Quote from @Fred Scott: @Roger D Jones:  Any insights on why the North Carolina purchase in Fund IV makes you nervous?

., allowing investors to purchase properties at a fraction of the cost compared to cities like New York, Los Angeles, or Chicago.

@Chase AlexanderRecommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

i want to be on a team and work with others and purchase subto deals.

I like the strategy of having a job with guaranteed income and taking advantage of owner occupied financing to purchase a house hack, staying connected with the REI community in the area, and scaling up from there.