If he owes a decent amount on the property, wouldnt the conventional route make him lose whatever interest rate he has?

.- They often get sold Class C or D properties while using Class A assumptions - then wonder why they are losing money.Here's some copy & paste info that you hopefully find helpful:-----------------------------------------------------------------------------------------Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

Mailing/emailing a notice to "start the clock" doesn't cost much and should be done to NOT lose time if tenant doesn't pay.

The owner seems to want to not lose ownership of the account altogether.

Let's assume that the neighborhood is a C class and the median income of the city is greater than 3X of the market rent.Here are some of the considerations I've come up with so far:- Units are in need of renovation and capex is too high or not available- Unit quality is not the same as market - Seller is worried about losing tenants due to increase- Vacancy rates are high or filling units have been difficult- Rent increase would take multiple increases over multiple lease periods to get to market rate if seller is trying to retain the same tenant- Seller inherited property and just want to liquidate- Seller needs to liquidate quickly (financial burden, sickness, quick exit from land-lording)It seems like I might be missing a warning sign about a deal if they are selling with current rents that are under market; but again, this seems to be most of the properties I've underwritten.And in the same vein, what should I be worried about when purchasing a deal with under market rent with the intention of raising them after purchase. 

I have seen these circumstances; people die, go out and buy a car, lose their job, etc… Just my own two cents, I’m not an attorney, just play one on TV

You will lose the capital gains exclusion by doing that.

Have you ever heard of a Landlord being sued by a Tenant and losing property?

Are you able to use it easily, only with a HELOC.If you lose your tax deductions, then Uncle Sam is happy to take more of your money each year.Good Investing...

Higher risk structures can achieve higher IRRs, but can also break even or even lose money.