It is discounted because the borrower has not been making their payments.

Hi, if I wanted rent payments ACH deposited like clockwork from tenants every month, what would I need ?  

Can they do a 1031 exchange and use their funds towards the down payment of a property and have their daughter take out a loan alone for the remainder of the purchase price (since she has a higher credit score)?

Can he comfortably cover the payment is he gets a POS tenant? 

You're right or just pull out a HELOC from my first property for a down payment.

The cash you get form either of those options helps to cover the down payment on future purchases.After you have purchased a few homes and have a good chunk of change you can get into 5+ units and start using DSCR to buy apartment style homes where you can focus on affordable living options and things like section 8.

Sending an account to collections doesn't guarantee payment or specify when it will be received, but it definitely gets their attention.

Your DTI for a mortgage is based on the mortgage payment.

rehab / rent it out and then save again for down payment on next property. 

this will help with the administrative tasks (e.g. yearly 1099, pay off statements, accounting especially if the borrower pays faster) as well as helping to provide a 3rd party proof of non-payment in case you need to foreclose.Be sure to use an attorney that specializes in Notes, not necessarily a real estate attorney, to draft the paperwork and protect your interests.Good luck.