By not putting 20-25% down it is causing you to run extremely tight margins, which in turn could put you in the red when faced with a multiple unit issue.

I honestly don't know if that even makes sense I'm clueless and can't find anything on the internet talking about this specifically.

The owners (original) allowed the house to get extremely run down.

I would really appreciate some feedback and honest dialogue about what the best route might be?

It's a gamble in some ways, as I don't know if I'd be able to build what I want due to zoning.prop #2- crappy neighborhood. 1/4 acre, BUT-has a single family house, small garage, plus warehouse space that's ~2500 sq ft. zoned C. cheap. house is also a total rehab. closer to "move in ready", but honestly, the crime in the neighborhood is to the level that I don't think I'd bring my kid there now.

I honestly think you can do better.Also, what is different about this short sale and why are the brokers so pushy?

I've been extremely lucky this year, with a major goal that is inching up on me day by day.

This would be my first owner financing deal, so any other tips would be extremely helpful.

I'd say it's possible but chances of success are extremely small due to your time constraints. 

It was an honest question not intended to be a critique.