And, that could take a good 6-12 month given the type of Property (large restaurant).

What markets and what property type(s) would you look into first?

Neighborhoods to invest in is a more subjective topic as that is often dependent on the type of investment you're interested in, your price point and even the type of tenants, if that's the route your going,  that you are trying to attract.

Find an architect who specializes in this type of work, and who is very familiar  with the building department

When you learn to partner with professionals who are well-versed in this segment, most distressed property transactions are quite straightforward.Myth 5: Distressed Properties Are Not Obtainable with FinancingThere is this perception that distressed properties are cash-type deals.

The local economy seems to be centered around these types of businesses. 

Most companies would require this type of disclosure since its similar to what they are doingYes Chris I agree - I think if anything it's not illegal state-wide or federally, since commercial lending is NMLS-recognized.

In the meantime I would love to have some helpful information or ideas to share with the buyers when we meet and ideally an agreement/contract we could fill out together once new terms are agreed to and then share that with the attorney so he could draft up the formal instrument for recording.If you have experience with this type of scenario, I’d love to hear any recommendations you have or any helpful resources you could point me to for the appropriate paperwork.Under foreclosure laws, you have to send appropriate notices and try to work with the borrower and offer a loan mod before foreclosure anyway. 

Has anyone been in a similar position, or has had success offering this type of agreement to a previous owner of a property who has not yet voluntarily vacated?

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