I have received a few garnishment checks from the employer.

Let's say the city cites them for violations and they rack up penalties and fines. 

How can I strike a deal where they can still receive some income from the property, but I can purchase the home and make my share and eventually (1-2 years away) own the home and eventually get full profit from this 8-unit property.

If you can get a better deal on the home due to age its a fine and if you need financing banks do not judge year built. 

In addition, all Rent payments hereunder not made within five (5) days of the due date shall bear interest at the rate of one and one-half percent (1-1/2%) per month"The monthly rent is $1550 so the late fee is easy - I've set the account to charge 5% if the rent isn't received within the 10 days stated ($77.50).

I know so many good people in the RE space that I know I should be just fine. 

If you decide to operate one outside of their desired areas, they will come after you with hefty fines.

If it was discussed and just a typo and its a good tenant it should be fine but some tenants would definitely take advantage of this.

As the largest investor in each loan, we do receive the points at closings. 

His credit score is fine but his income is showing too low to get the loan, so I though maybe I could use my HELOC to make the purchase and do a Lease to Own.