So pluses and minuses exist either way.On REO purchases you should be able to get title insurance, where the insurer will search for liens and insure if none found (or if the ones found will be satisfied from seller proceeds at closing).

Since the other lien exists it will need to be resolved or released.

A friend approached me to help him with a property he inherited from his mom passing where a developer wanted to buy from him for commercial development.The developer after me catching everything in the contract to tie up the property with the seller asked me to work with him on the other parcels as he would rather be working with me than against me assembling the properties.Off I went after that for about 3 years in land development and then went into existing investment properties.I did things kamikaze style and figured them out on my own through the school of hard knocks.In your situation if you are focusing on apartments I would do the following.

Be compliant with lending regulations and stop trying to squeeze by some law by defining what you do as not being applicable.

His existing tenant was moving out and he was going thru a divorce.

From what you say, a section 8 is carefully regulated but in this instance it seems it wasn't.

For my other two properties, I have just used the lease of the PM company, as they have been in business many years and would be familiar with the regulations for their specific states/counties.

I also wonder about the tax impact (full recognition of capital gains at time of "sale") if this is done at scale where the seller may be construed as a "dealer".In my area, quite a few landlords seem to be converting their existing rentals to land contract deals, to get out of the landlording liability and transfer the maint to the buyer, while still maintaining the ability to evict (rather than foreclose) within the first 5 years.

existing financing at the end of the term.

I found some fixer uppers that were sold off market that I could get the seller to seller financing with a bit down and a short term loan (even via wrap when a lien existed).