Working with a mortgage broker that specializes in DSCR loans will help you find better rates and programs such as lower DSCR ratios such as a DSCR 1 ratio for better terms versus needing a 1.2 or 1.25 DSCR ratio (more on that below).

Are you getting the property at market rate or below market rate?

What's labeled Private Money in the market - an individual looking to build a lending shop by using personal funds - this is out there but these guys are not cheap on points or rate and they have rules and guidelines like anyone else, so really the difference between them and hard money is nothing other than appraisal perhaps. 

You don't want to lose your rate on the house you are living in now unless you want to sell it so since that is an owner-occupied, you need to stay there and save up the 20 percent for the second property based on what you said.

When it's sold it will be taxed as capital gains tax and may also have some unrecaptured depreciation which is capped at 25% and  recaptured depreciation as well which can be up to your ordinary income tax rate.

You didn't mention the interest rates but 3 years ago, I am going to assume it was much better than it is now.

Depreciation lowers taxable income now but is subject to recapture at a maximum 25% rate when the property is sold.

I like the other recommendations, give them a seller financing offer that is their asking and a good interest rate with terms that make sense for you, and offer what the bank will let you offer.

The thing that would deter me from this location is a background rate of appreciation of 3.12% and low school ratings.

Other KPIs and considerations you should evaluate when talking to any lender who offered private placement of loans/notes are historic default rate, how quickly they can place your funds (do you get preference over their income funds, for example), average interest rate - borrower note rate and what is passed through to you, are loans serviced by a 3rd party servicer or in house.