Bill,I am just gonna answer your questions as I read them so please bare with me haha.

PC just keeps on goin...I've had them driven over and knocked out of the (destroyed) steel frame, with barely a scratch; even shot at from a distance- no hole, not bent, just a "star" in the paint that was easy to touch up.

It helps that I've done some REOs and closed them- but if you can present an offer to the bank that gives them a comfort level that you can close- you don't have to fear making an offer that's fair to you.Let's face it- the bank has already screwed up on the loan.

An actual appraisal is the bare minimum after the underwriting of the payors.

Do I need to be more careful with this circle until I've known them for 45 days and had 3 contacts including one face to face? 

That is a great way to get face to face contact with other investors.

Or would you like the face to face interaction and deal making that comes from wholesaling?

I believe I am going to go into this deal and if I fall on my face I will have learned many vaulable lessons.

  $20k will barely pay for the closing costs and loan origination fee on a $500k purchase, even from a bank, let alone rehab funds to get the property to a proper occupancy.SBA is not possible to utilize for apartment complex investment purchases. 

Sellers are often emotional wrecks barely hanging on to reality (often when their agents are "less than amazing").