Do they have a way out of the balloon payment?  

somewhere in the price range of 50k-100k, because thats  what I can put a 25% down payment on.It sucks not being able to take advantage of an FHA loan for my first home purchase, but I don’t see myself moving soon because my entire family lives in LA. 

Higher rent, guaranteed rent payment, collections and damage you just call their commanding officer.  

Post on Craigslist seems like another 'guru' but I cannot put my finger on it, he seems to be following Cherif method, not sure what to make of it.

Since your goal is lowering monthly payments for better cash flow, it might be worth focusing on reducing expenses elsewhere or exploring other investment strategies.

So I don't want to spend $90K on a down payment and closing costs and only have $25K to fix it up.

The coverage limits are as follows:$200k -> Dwelling Premises Liability -> $300,000 per occurrence Medical Payments $500 per person / $25,000 per occurrence Additional Living Costs And Fair Rental Value -> $19,000 Loss Assessment Coverage -> $1,000 Ordinance or Law -> $20,000 or 10% Water Damage Limitation -> 10% ($20,000) Deductibles All Other Perils -> $2,500 Limited Theft Coverage -> $2,500 Water Damage Deductible -> $5,000

At the end of the day, your servicer is there to keep your loan compliant and to process and apply payments.

I had a chat with them on the phone as i was curious about the funding.. but came to the conclusion that the down payment ( the client made to buy) was probably what they paid for the property and the seller carry back note was the profit.. and then the seller carry back note is sold to yet another investor.. who is investing for coupon money.   

Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice.