We've tried on a few occasions to purchase directly from the owners for what they owe, but they weren't willing to go lower than their asking price.

On rare occasions, higher. 

I know @Michael Blank has some experience in this.

Well, you fill in the blanks.

In the past, they have been late and on occasion are still late with rent payments. 

@Shan Cao Unfortunately it's a rare occasion we would represent a SFR transaction...just not our game.

Then consider going back and filling in the blanks.

The upstairs is a 3-bedroom (very rare in our area) the bottom was recently a salon and needs updated to rent as a studio or 1-bed (no shower, no kitchen) however it's an open space that is a very cool "blank canvas".My real question is about LLC vs. personal for our situation, not really looking to nit-pick the KPI's, but feel free to comment on those as well...Based on 4 different lender scenarios available, the range for KPI's is below:Assume price of 175,0005-year ann.return 19-25 %CoC ROI 14-21 %Cash Flow 440-850 per monthEstimated investment to convert the lower unit:  $10,000 (but could be more if I cannot DIY as planned)My wife is the agent so she'll get commission of about $3,500Recent updates within last few years:  New furnace, new central a/c, new roof... without a formal inspection, I would consider the overall condition to be "good / very good" shape for being an old building. 

Multiple boxes left blank, different names in the box for supervisor and supervisor signature, one of which I came to learn is not authorized to sign such a form.

I purchase key blanks on the web for 17 cents each.