I mean, why would an owner of a move in ready property sell his house directly to me at a significant discount instead of selling it on the MLS?

This particular company claims to offer deep discounts on the removal of the boiler/radiators but in exchange, they're going to take the copper and scrap it and get who knows how much for it.Anybody else dealt with this scenario?

He did say if I buy all 3 he even give me a discount. 

With the 2 SFRs being sold to you by friends, they'll be bought at a discount and requiring very little repairs.

The market is a little crazy in this part of the Boston suburbs and I'm estimating that we're getting roughly 60-70k in equity in the discounted sales price...maybe a little more.  

As @John Horner mentioned, so that you do not turn off your cash buyers, you'll want to negotiate a significant discount to the MLS listing price to make it a deal worth pursuing.  

This method is really great fun as you can always discount the note in the future, or renegotiate if the market shifts. 

So find a distressed or discounted property that is going to appraise way higher than the purchase price once fixed up and then pay off your hard money lender.

Before I ask this, I know people are going to respond that it depends - and I know that it is true that it does depend - but I'm not asking for an exact answer, just a rule of thumb/ball park of what a reasonable discount rate for determining the price to pay for a non-performing 2nd note?

Show them how you got to your offer by listing the after repair value, the costs, and your investor discount.