They'll offer all sorts of "fixes" to increase your property value, but likely don't have the expertise to do them. 

In general, it is harder to secure props that flow in these areas because they tend to be better taken care of, leaving less room for a well-done cost-effective rehab to increase value while keeping the all-in price below market.

Seems like a very intriguing way of managing property and benefitting from increase NOI and ultimately property value.I am looking at a 3 family property that needs a ton of work (perhaps $75-100K, although I haven't done a deep dive on pricing yet).

My goal is either to lower my interest rate which will help lower my mortgage payment which helps in increasing my monthly profits or pulling equity to make improvements to the rental and invest in other investment properties.

well assuming it meets the QM rules for owner occ.. etc.the scenario you presented is not a very attractive note unless the discount was HUGEPV is what investor look at.... what rate of return they want and in notes its usually 8 to 12% APR but with 100% leverage most investors will only pay on face value about 60 to 70% LTV ... so right off the top you would be taking a substantial hair cut.No secret what your trying to do.. but I surmise you will very quickly realize its not realistic .. the discount would be such that it makes it a no go.If your thinking someone will lock up their money for 10 years at 5% well thats not going to happen especially at 100% LTV... 

This would increase my monthly cash flow immensely.

As rent increases with inflation, the rest of your numbers will follow.If buying a condo, thoroughly review the financials and make sure reserve account balances are in line with the most recent reserve study.  

Overall from what I see it has depressed multi-family units on the small side (Duplexes and triplexes) and made it very attractive to invest in.

Consider, Cost to turn the unit, cost to advertise, down time, and chance next tenant would be any better than this one.I think your late rent issue a few times is small compared to what you could end up with.M2M and let her ride. do rent increase in Spring so your chance of turn will come at better time for you.

It doesnt mean they are making money, what is does mean though is property prices are increasing because of it.