It's a bet on the future appreciation, maybe generates enough income in the meantime to pay taxes and insurance, chances are no cash flow. 

You need representation that has a lot of experience to avoid common issues like early terminations, performance of that location for tenant, etc..Rule #1 is make sure you are happy with market rents for the building (not what current tenant is paying).

The borrower has been paying on time and the CFD purchase price to property value is <50% at this point.

A lot of the conversations I had with the realtors that showed it had the same feedback, that for the PITI payment on this property, their clients could probably buy and new build and still pay the same thing (The house was situated rather close to a couple of new build communities).

They are much easier to deal with and there are no hurdles or lender requirements to meet other than paying the note on time every month. 

So her broker told her the insurance company is likely going to send them a settlement rather then risk this going to court and paying those fees.

@Tavish File, it sounds like you would be working to pay MORE money!

- Have you stress tested the deal to see how low vacancy could go to still pay your mortgage?

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

Technically SBA doesn’t allow you to pay a second position back for the first 2 years, but there are things you could do to pay the seller back within the first 2 years.