It was bought in 2004 and due to financial issues, I believe ~$197k is still owed on the mortgage.

Then as soon as the 1031 is complete do a cash out refi, or a second mortgage or LOC on the property. 

I've been reading more about subject to and here's what I've learned:-Good for sellers who are off market-Have low to no equity-Have a mortgage with a low interest rate (less than 5%)-Be absentee or out of state (vacant property, or have a tenant)The buyer would then take over the mortgage payments, and have the seller sign the deed over to the buyer.

Quote from @Chris Seveney: Quote from @Mort McGuire: Good morning to all,Does anyone invest in mortgage notes?

Current comps rent for $2450+ and the mortgage + HOA is $2180. 

though; (1) there are tenants in the house on a two year lease (payments are enough to cover mortgage payments), and (2) the Seller wants the option to buy back the property in two years.

I'm trying to get a mortgage, but it's entirely possible that the mortgage might not cover 100% of the price of the house.

Lending on mortgages.. buying bad paper.. new builds ? 

Where you would put in the mortgage the seller is financing.

The rents pretty much never seem to cover the mortgage costs, even with low interest rates.