Everything being equal, this appears on paper to be an outstanding investment opportunity, based on what you shared.

Here again, it's normally country banks sitting on a lot of money that they don't need right away.Looks like the common thread here is looking for folks selling that don't need the money, or banks with too much money laying around, they are happy taking a piece of paper from you, i.e. the mortgage note.

Also, if there is debt forgiveness as part of the equation, the paper loss from that could potentially offset some or all of the the "gain" from the mod. 

Regarding paper work, get the owner to sign a purchase contract with you, you then have your buyer sign an assignment contract.

http://www.nber.org/papers/w12331.  

Most of the major funding companies I am aware of, who make a business out of buying owner finance paper, use partials on a large percentage of their purchases.

Have the title co. get the necessary documents and handle the paper work side of things.

Not great returns on paper, but that house will rent out quickly each and every time because of the area.

Do other buildings have better parking, layout, technology hookups than your building has?

My knowledge is based on HML , which I have 30 years experience at.But buying existing paper on owner occ mortgages is whole nother kettle of fish.