At least that way, in the event you never get your entire principal back (targeted within 5 years, although they'll make a best efforts attempt to get you out sooner penalty-free after 12 months (slight penalties months 1-6 and 6-12)), they still got to collect their management fee along the way.  

Should I attempt Sub-2 or contact the bank and try and work out agreement before foreclosure?

HCD would likely squash any jurisdiction’s attempt to remove or limit a safe unit.It is a good investment to get the unit permitted especially if it is close to the quoted price. 

Ask yourself how much work you want to do (real estate is not a passive income endeavor) and how does it or does not fit into your life right now.

He has built an incredible section 8 wealth machine that several attempt to emulate.  

Quote from @Christine Gordon: Quote from @Roi Azoulay: This firm is known to advertise fake distressed properties all over NY and reach out the the actual owner w/attempt to get listing agreement, Unfortunately they are still active and keep doing this for many years and no other website/mls does anything about it. 

Which is to say any attempts beyond the method of communication in the profile are likely to end up convincing the landlord you and your friend would be a pain in the butt as tenants. 

Best of luck with your current endeavors Jackson, I've messaged you to connect as well! 

Not only is it the right thing to do to help them get their legal ducks in a row about knowing SPECIFICALLY what the seller did wrong, ie did not disclose and can prove it was done for the sole purpose of deception to make the sale "smoother" but it can help you look good and have you learn how to avoid in the future (as you say "tighten up your due diligence")It sucks when agents "help" 1st time or largely inexperienced buyers long enough to make the sale and get their commission but then peace out on the client when something like this happens.It It seems like you are attempting to do the right thing which is admirable bc at the end of the day, the court system is the closest thing to a "business police" that ppl can get. 

I am creating an llc with a couple friends as we go into this new endeavor.