My main concern is that it is in a "flood zone" although it RARELY floods.

The owner had a lock box with keys on the outside and requested that we leave a roll of tp and paper towels upon our departure as well as $20 on the counter for the maid.

A $500,000 building with only 20% down (could be tough) leaves you nothing for improvements, and $0 to work with.

My only 2 cents would be when your ready to leave it, sell it.

In other words worth IMHO to at least meet with them and share your needs/concerns.

If you are concerned you can hire a private inspector.  

Obviously there are ways of finding the homeowner, like FSBO, craigslist, facebook, etc... but I did not know of the option of leaving a note.

The seller is willing to give Joe seller financing on the house, but is concerned about how to pay off his own lien.What can Joe do?  

I’m concerned about resale value and if they will be able to rent the small apartment on the land.

Those new and expensive units will be the first ones people leave for something cheaper if they need to save money or for a bigger/better home and neighborhood,  depending on the individuals needs.