Whenever you are using leverage, you need to have ample slack in the system and sufficient cash reserves (or access to cheap & instant cash) to cover vacancies, capital expenses, unplanned maintenance, and other issues to avoid missing your note payments. 

I own a car ($850 mos. payment). 

What is your game pan for the property and how do you propse to make the monthly payments?

HUD tenant's rent is under rented by $500 per month and HUD re-evaluated her unit and lowered the HUD payment by $7 per month.

Passive income is something talked about, but the majority of real estate investing is far from passive and what is called passive has payments for the passivity (management).Your why is strong, to provide generational wealth for your family and likely achieve time freedom long-term, that's awesome.

Full repayment of loan will consist of balloon payment plus 10% net profit of sale.

Other option would be subject to where the mortgage doesn't actually transfer into your name but you make the payments.

Either for violating the Alienation clause or non payment of tax insurance or mortgage payment.Now you friend is trying to figure out what to do. its simple he needs to stroke a check and pay the mortgage off. probably does not have enough time to refi.Now scenario 2.. your friend bought a sub 2 from some one that did the sub 2 and they are not paying your friend is now going to lose his/her house even though they have paid the person who bought it sub 2 ripped his payments and did not pay the underlying and is just a theif.which is it ???

You only need a place to track tenant information, payment history, maintenance, etc.

Trust me, REI is way satisfying and it can make you rich, or not so much, so give it your best shot!