Value of the collateral (LTV, what is their exit strategy should it become non-performing)3.

You need to perform due diligence first and foremost.

While I would personally find this appealing as a personal residence I am not sure how they would perform as a rental.

If you have it in your lease and follow that procedure according to your state law then you can exercise that right.

Also, your money is now in a performing investment (free rent for you).

Although for me as a Past HML and current NMLS broker ( inactive currently) why you would want to jump into NPN instead of looking for performing especially starting out..

You'll slowly build passive income, equity, and most importantly, you'll learn how to be a landlord and perform simple repairs. 

When they indicated it was fixed during the due diligence of the property, did they provide proof (e.g. an outside vendor invoice and what was performed)?  

A lot of things can look good on paper for you out of state Investors in Indianapolis, but I get calls and emails all the time from out of state investors wanting to off load their Indianapolis properties that aren't performing.  

The houses were their primary residence and they had to relocate which turned them into landlords because they did not want to list the property at the time, so they agreed to lease optioning the home with current tenant buyers that are not able to perform.