By the time I reach 20% equity (likely 3+ years away), my monthly mortgage payment will come down when I refinance, but $600 is a big hit to the numbers. 

As a foreign investor, I can get financing up to 80% for the purchase of real estate, so the biggest problem for a more serious project is down payment if you have a solution for down payment, please suggest me. 

You could structure the deal with seller financing to bridge the gap.Possible offer structure:-Purchase Price: $170K - closer to actual value-Down Payment: Low or zero down to conserve cash-Interest Rate: 3%-5% - or better yet, 0% if the seller will agree-Monthly Payments: Interest-only or deferred until the sale-Balloon Payment: Full payoff in two years when you sellIf he wants $200K, you can still make an offer of:-$170K purchase price + $30K as a second lien due at closing-Seller carries $170K at a low interest rateHe would feel closer to his number, but you still keep within reasonable investment limits.2.

With $15-20K liquid, focus on lower-cost Midwest markets where down payments stretch further. 

Based on what my real estate agent thinks that this quote will be, roughly, and the after repair value, it looks like I could buy this property in cash, spend a month or two fixing the damage, and then put a mortgage for roughly 1.6x what I paid for it and thus have a cash flowing property at a few hundred dollars per month and a little more money in my bank account ready for a down payment on the next deal.

In my experience there is little that the size of your down payment won't fix. 

As you alluded to, sometimes a passive note investment purchased for monthly payments “goes south”, and becomes an active participation investment, with plenty of additional capital required for legal fees, forced place insurance, and property taxes.  

He may accept a lower than 20% down payment.

Which of the above created the failure or postponement of payments?    

I am looking to refinance because I have a 5-year balloon payment that is not too far away.