Also the lack or higher risk factors will be noticed more and you will loose some buyers with higher wind risk.

He took them to court and lost so for several years this place has been without any HOA.I pay my own taxes for my part of the building and land so I'm not in risk of loosing it even if the other people don't pay their taxes.

I also use a score sheet as part of my screening process and if you are late then you loose a point. 

It can be as little as $1 or a really substantial amount - typically a similar amount as earnest money.With an option you know that you will be able to buy the property as agreed and the seller doesnt have to worry about finding another buyer, as they have collected an option fee you would not want to loose.

I think 70% is a bit excessive but that's beyond the point, so long story short yes it might be a problem or at least it has been in my experience :)

I'd bet by the time you pay that loan off you will not be able to get a loan at 4% anymore.If you are a prudent investor you should be able to earn more than 4% elsewhere (SP traditionally has returned 6%, and is the most passive investment you can make) and as RE investors we certainly seek returns in excess of this, so don't worry about paying down that mortgage so quickly.

That seems excessive.  

It's a small initial cost $5k I'm not sure it's allot to loose the place will cash flow at close to $2k a month once rented so worst case scenario I make my money back once or twice and then loose a friendship. 

Do I want to pull all the excess cash out?  

So, by buying it for less than market value, you might be causing yourself excess capital gains taxes later on.