After observing the properties performance we have noticed three major deficiencies which need our attention for the property to perform much better -  1.)

Thus, you have to some extent, a disproportionate amount of liability onto that partner since they are indeed personally liable either via damage to credit or for deficiency and/or both.Moral of the story, if your lender will allow you to vest and borrower in the LLC.  

BTW, if you get involved in any seller financed note or installment contract, your cash purchase changes to complexion of an equity financed obligation to the extent of cash paid as a funded loan that can impact foreclosure and deficiency aspects...but that's another matter.Impressed with your recognizing the importance of pre-origination aspects as well as post closing matters.There is no flow chart that I know of for note due diligence as there are infinite concerns that may need to be addressed and the road can take sharp turns without notice.

A mentor is more of an instructor type of relationship and frankly you become a student and you don't evaluate their deficiencies.

California has non-recourse home loans by statute as to seeking deficiencies against a borrower.

The inspection report came back, and there are a ton of deficiencies( roof in bad shape, pier and beam findings suggesting movement of the property, improper electrical fittings, gas lines not to code, etc).

Suggest you get hold of a licensed general contractor to itemize the deficiencies in the order of urgency and your budget.

Now, how to negotiate the deal beyond that or what the exact cost to rectify the deficiencies on your specific property I can't say.

The chances of deficiency judgment with a short sale are lower compared to a foreclosure as the lender agrees on solving the problem together.

Steve, It's an Estimate Of Market Value, it's an opnion of value, not a market value.Where the parties have equal knowledge (within reason, knowing deficiencies, zoning issues, etc.) of the property, not so much as to the ability of one being a better negoitator.Where the buyer and seller are aware of the issues that effect value concerning the property.