I've never inherited a tenant with a property purchase, nor have I served an eviction, but I am faced now with the prospect of buying a good property/location where the tenant has a few red flags. 

I'd demand the deed and would gladly give a security deed (or mortgage) with the 18 month balloon, if that's what was agreed upon.Unless this "sale" is formally consummated with an actual closing agent (title company or closing attorney), I wouldn't move forward.It's amazing how many folks "forget" (or "mis-remember") promises made...Also, if you haven't yet done so, now is the time to begin working with a great mortgage banker/broker to determine your refi prospects.

Right now I'm thinking about either investing in single family homes or multi-family units for buy and hold (out of the area), or potentially offering hard money loans.I really don't like the "prospecting" or "sales" aspects of real estate investing, but I love figuring out how to structure a deal and I love analyzing and running the numbers.Do I go the buy and hold route or the hard money route? 

@Andreas Prechtl The seller will have the same problem with any prospective buyer.

And these are also most liquid should you ever need to sell quickly versus a townhouse and especially more so than multi-family, which would only sell to another investor likely seeking a deal - whereas you can sell a SFH to a prospective owner-occupant willing to pay top price.

I fear I’m not 100% versed in what I can and can not ask a prospective tenant.

Somehow I need to be able to set up that apartment with A) getting it cleaned & ready to rent, B) showing prospective tenants, & C) giving an apartment to someone that will feel safe there.Thoughts?

Danbury and Norwalk are on my list but the prospects are limited. 

I'm curious as to what everyone sees happening in their prospective markets in regards to new construction.

I have received numerous responses as to my responsibility to disclose this information to prospective tenants moving forward.