now notes can go bad but I have been buying notes since the mid 80's and have some pretty good experience at it and am a NMLS licensed mortgage banker that does HML or will be doing it in ORegon starting next week... so its what I know and am comfortable with. 

A realtor paired with a mortgage banker.

I can also talk with a banker friend of mine and get his perspective.

The other problem with getting finance on your first deal is that you don't have experience to make the bankers comfortable with your ability to pull off the deal successfully.

One of our most beneficial team members early on was a local community banker that was also a RE Investor. 

Kindly know, Berkadia is directly licensed by Fannie/Freddie and we are high-volume agency bankers.

Banker asked me if I had collateral.

Talking to bankers, agents, and everyone else you deal with with a positive and humble attitude with go a long way.In fact the banks screwed more people with their too-loose lending guidelines than with reasonable guidelines.Subject to has been suggested, and that might be an option for you.Another might be to use hard money to rehab and the refi.Another might be to use owner financing.Almost every bank is going to require a significant down payment and some amount of reserves.

I also thought I'd talk to my banker and see if he had any suggestions for me in terms of financing this deal.The seller didn't give me any idea of what kind of price or terms he would consider.He did give me a print out of the addresses, number of bedrooms, if the house had a garage, county assessed value, annual taxes, and the monthly rent for each property.How do I approach this deal and what kind of due diligence do I perform?

Lots of local business people work there.Talk to local bankers.