Positive and negative forces will cancel each other out to some extent. 

I have been through the BK route more than a few times in 40 years of HML ing.. and as Don states it can be just crazy what happens what the debtor will do what the BK trustee will do what the judge will do.. that all said if your position in the note is discounted enough probably still worth it. but in my mind to pay 90% and if there is not SIGNIFICANT upside I personally would not do it unless you have a repositioning play or something that no one else sees. 

****************************************************************************************************Here's my breakdown for an 8-unit property listed at $600k, but based on your analysis, it doesn’t seem to cash flow positively.

Would 1st lien position and rights to collect the property if I default be considered skin in the game? 

With your income and plan to pay off student debt, you’re in a strong position.

2-I am trying to position to the Buyers to take it as-is: home has been used as a 2 family since its construction and I just bought it 2 years ago with this not coming up. 

Is there a type of mortgage insurance or bond you can get for owner financing that secures his position? 

if you're not in a strong financial position, it's probably more difficult to be confident.That's a great point.

They were all non performing - many renovation loans where little reno was done and maturity date already passed - guessing it was inexperienced borrowers learning how to flip and were getting "easy" money. ya they took me out of about 14 of my deals and well being that I was getting paid it was not my place to coach them they made loans far in excess of my positions. 

Quote from @Bryant Brislin: Land in the path of development that may seem a little far out, but your gut/intution and common sense from an urban planning perspective tells you that some day, whether it's in 10 years, 20 years, etc it will be a great long-term position for your family to have and hopefully sell at a signifcant multiple return compared to what you've paid for it.