He may note iIf the new buyer uses FHA, VA or low down (<20%),the lender may not approve a mortgage.

They’re wholesalers...not real buyers.  

Contacting the "third party" buyer?

Her incentive to do this is that she'd rather loose $20,000 than the entire $66,000 she has in equity.Clearly, I need to verify the creditworthiness of the buyer, verify that they will in fact be able to refinance, verify they have strong homeowners insurance, walk the property, get title insurance, have lawyers draft the needed documents, and make sure it's all properly recorded and collateralized.

This style loan really detoured other buyers, but seemed very simple to me.

So if you make an inflated offer including closing costs and the property doesn't appraise, the deal has to be renegotiated if the buyer doesn't have the money to pay closing costs.You can also take a slightly higher interest rate in many cases and get a lender credit to cover closing costs (or a portion of costs).  

A buyer that lived in the apartment complex down the street saw our yard sign and approached us with an offer right away.

I know there is a law that you can not originate a FHA loan for your buyer client but does that mean you cant have both active? 

On top of that they are relatively easy to sell, where something like a multi family has a smaller buyer pool.So back to the details..Purchasing my first condo with $30k cash, then another $10k, puts me at $40k total investment, I rent out for $800 a month, after all my costs I'm looking at $450 cash flow per month.

What finally helped me make the decision was when I looked at the equity I was pulling out (after realtor fees, and buyers closing costs which are standard in that area).