.) - PITI = reasonable estimation of long term cash flow. 

Original loan amount- $480,000Refinanced to- $692,000Current bank wants- $792,000.00Rental income currently- $7150Possible rental income after Renov- $8900 based on current market rental ratesReno estimates- $50,000Is this possible to have an investor come in and purchase the note from the current bank at a lower buy out amount?

I have a good conventional renovation lender if you need a referral, As the buyer you have to qualify for the loan like any conventional loan then submit repair estimate and a subject to appraisal for project review. 

But anyways over this past summer I got in touch with my real estate agent and she told me that in perfect condition my house will be worth 200-210k and I owe 120k, well in my own opinion I believe that's a high estimate.

At a minimum, an agent can set up multiple "hot sheet" searches to find rentals that meet "The 1% Rule" (monthly rent must equal 1% of the purchase price).The second step after determining potentially good rental spreads is to get a close estimate on rehab costs.  

The hard money companies I looked at so far ask for an estimate of repairs so that didn't seem right.

You will need to get several bids from plumbers to give you an estimate of the cost to install new meters and run any needed line to their appropriate locations / retrofitting, etc.  

Scott The Book on Flipping Houses, The Book on Estimating ReHab Costs http://www.biggerpockets.com/flippingbookYou might consider Niche or Specialized Housing like student housing.

Also a good equation for maximum allowable offer (MAO) isMAO=NOI/MARKET cap rateDont use the cap for the property, use the cap for the market it is a much better estimate of the future of the rental market in that area.  

What would you estimate is the market value of the property?