In my experience, you can purchase the existing home and the encroachment is grandfathered in, meaning the vacant lot owner can't force you to move it.

Do I draft the contract price for higher than the actual build price that would include our estimated profit (sell price) or would a separate agreement between the lot owner be sufficient enough that outlines the deal since we don't know the actual sell price until it goes to market?

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

Trofimoff is the owner and founder of Viridis Holdings LLC, doing business as Georgia Mobile Home Investing (“GMHI”).

Ask to speak with some of their current owners and current/former tenants.

Living, but either way you could try speaking with existing owner/operators groups in the greater bay area, or even central coast, looking to expand their portfolios for a joint venture.  

It NEVER works out well for the owner.

Mind you, it was a rental sometimes, but it was still my owner-occupied house technically on paper.I qualified for an SBA disaster loan covering almost all of my damage.

Usually, owners will look a little more kindly on MTR because it's less wear and tear.

These loans are not allowed in non-owner occupied scenarios.