Would you continue with purchasing the note or would you request the seller provide the original allonges before moving forward?

There is absolutely no way you can verify the cash rent payments, not even when the seller presents you with verified receipts.  

Would I be able to resell it with seller financing right away (without having to quiet title)? 

My friend (the seller) is telling me that the appreciation is where i would make my money.

If you have any specific questions, you can always send me a message or ask here and I will respond.Basically, for a mom and pop property to work, you need a motivated seller.  

The seller just had a baby and they purchasing a home that is contingent on the sale of their co-op unit..

If the seller is offended then that's their fault for getting emotional in a business transaction.

I was planning on demanding the following:Properly perform the poor quality repairs for no additional chargeBe reimbursed for repairs I did not approve and were not critical to get the condo back on the market after the bad tenantBe reimbursed for the additional cost of the home owner's insuranceAfter the above are sections are completed, terminate the contract and get a different PMIs this too little to demand?

@Andre Minasyan,He mentions the supply vs demand issue.He did not mention the factors which are currently dampening demand.Lending is still quite dear, though there has been some improvement.

There is an obvious potential to add value, as well as a motivated seller.