Let me know if you need more information or a referral link.

One of the major issues I see is this.

I'm considering purchasing a condo or a small SFH in the Oceanside/Carlsbad area as an investment property and renting it out on a short term rental site like AirBNB. 

So even if you had a buy out agreement negotiated up front and execute that buy out agreement, the bank would still require him to be guarantor unless something drastic changed on your side financially.The best scenario here would be to purchase and rehab the property using a hard money lender or bridge lender.  

You rehabbed the heck out of it?!

In 2014 it cost me about $42k to do this.  

The reverse mortgage company wants buyout and I dont have over 200k to pay out.

If the bank will call their note if you commit to the transfer you can also check out this article as one strategy that has been used to work around the issue.This is not legal advice, just my opinion as a real estate investor.

The internet makes the world very small.As far as buying out of state, one challenge I did not see any other replies mention is your occupancy. 

4.Tips to avoid similar issues in the future?