If you have a seller finance note for $2k/mo and make $4k/mo then you have a DTI of 50%...it won't be on your credit report, but is a debt that needs to be disclosed.

Just gotta be real with them :D Let them know you will try your best to have seller cover all of some of the closing costs.Can also always offer above asking price and ask for the difference as seller credits

I'm looking at purchasing a rental in North Carolina, I have Excellent credit (800+) and money for the down payment..

If you have excellent (760+) credit, can hit a 1.20+ ratio, loan amount is where it needs to be, it's a single family long term rental and you're okay with (and state/lender allows) a 5-year prepay, low 7s is possible.

I send tenants to collections because I get the comfort of knowing it sits on their credit report for many years and prevents them from getting loans or cheating another landlord.

Past operating history is irrelevant.  

I explain they will have difficulty Renting a quality unit, that I will ding their credit, that I will attempt to garnish their future income to recover what they owe.

Using a company to do rent reporting to Credit Bureaus is a good idea to prevent the delinquency in the first place and at least increase leverage to recover the unpaid rent after it has happened.

However, if the seller is giving you a credit they might lend off the price net of that credit.As for the balloon payment that shouldn't be a problem if you sell the home, which I imagine is the end goal?

If anyone will do this, it will likely be a small local bank or credit union that you have a banking relationship with.