Nothing like turn-key at a discount

If they want to discount the note in order to increase their return try giving them a higher interest rate and keeping your equity position - all things the same it is better to pay a higher rate on a smaller note than a lower rate on a larger note.

The key to this deal is to get enough of a discount that you can find the end buyer at a higher price.

And now I find atleast one a week, but I specialize in finding discounted property.

Even if you were successful in buying the property at a big discount just after a death, doing so is an invitation to a lawsuit.

I asked about a discount/finder’s fee, which they agreed to.

A short sale in real estate refers to a concept whereby a lender (mortgagee) agrees to discount the amount of money owed on the loan made to a borrower (mortgagor), due to hardship on the part of the borrower.

Lets say you buy at a discount 40% below market, 420K, still wouldn't cashflow.

Does this make sense or do I need more discount to fair market value so that I at least break even before I add value by maximizing occupancy?

You should ask one of your tenants to put the tools in his basement for a small discount on the rent.