The inspection contingency gives you the opportunity to hire a licensed inspector to inform you of any property defects, which you can negotiate with seller.

By primarily working with investors I have learned to find deals, analyze cash flows, and negotiate different types of deals.

As for the down payment; I'm assuming we would negotiate something substantial enough for him to make his move to Dallas (like 10%-20%).Final question: if he's carrying the note (I.e. 

The upside to you is that he is on a timeline and won't likely be in a position to do much negotiation.  

With regards to duplexes, instead of plumping for FHA, would it be possible to create a situation where an investor stumps up the money for a downpayment and then gets a pre-negotiated rate.

If individually, I would only make an offer on one and negotiate from there - with 4 involved, you'll have a better chance of 1 of them being more motivated and he/she will influence the other 3.  

Plus, if your agent is good at negotiating they may be able to save you money, not to mention you won't have to hassle with all the paperwork, and there is a lot of it.

You might have some room to negotiate. 

One of my deals I was able to negotiate 6% interest with 30 year amortization with a ballon(balance of the loan) due in 15 years.

I would have her talk to an experienced short sale team in her area, to discuss the time frame, options and process of negotiating a short sale.