They probably aren't being intentionally malicious, just wanting to offload any problems on to you.

pretty sure you can't be a tenant at first... but if your intent is an investment property and life happens and whatnot... you end up a tenant later on then it'll be ok.

After the statute of limitation expires, the lienholders cannot collect, with a few exceptions.All lienholders must send a demand letter to debtors with the intent to foreclose on the property, the demand letter must be sent by certified mail.

Thank you ill look into this

@Lamontis Gardner, to do a 1031 your intent in purchasing that property must have been to hold it - not primarily resell it. 

I would only do that if you have a large amount of reserves, enough to cover this property for a few years and take the hit of any loss income (e.g. job) since the Fed is intent on creating a recession soon.Whether you intend to hold this property for a few years or forever, I wouldn't get the 20-year note.  

Now the bank is upside down on a crummy house.I'm not trying to imply that this is your intention but there are people out there who would do this under the right circumstances.

They won't "take it personally" they'll take the extra money and close the file.If OP wants to avoid a prepayment penalty, he could negotiate a short term loan and pay a couple extra points.Now clearly, if OP is disingenuous, and takes out a 30-year mortgage with the intention of using it for house flipping, then yes, it may be a problem.But I don't see any potential pitfalls if he uses a normal secured business loan.

It sounds to me like the true intent is to allow third party investors an investment opportunity and there's a lot of thought in figuring out how to structure it so that it doesn't look like a security.

Our intent is instead of having the buyer put down a huge or customary down payment we start low so they have funds to improve the property since many need repair.The rent ($500/month) is roughly 65% of local market rents.