The current business plan I am developing follows the path of one found on a BP podcast, describing a the 3 year plan by acquiring 5, 10, & 15 units over that timeline. 

I have a vision for myself buying and holding multi-family properties (preferably 4-plexes) in the central Kentucky/northern Kentucky areas, using cash flows to reinvest and acquire more.

I know if have the option to walk away, but does anyone have any other ideas of how to solve the seller's problem while still acquiring the property for a fair price?

For long term hold if you buy with cash flow it will be fine but the likely hood is that a dip will be followed by a long term adjustment with no appreciation.

Eventually we would like to expand and acquire more homes, preferably in the same city as the first purchase.

So, let me just state this generally ...You might be a bit pressed to find a single investment property which will net you $1,000+ a month after expenses and debt service, if I understand your post.Remember also that you will be paying taxes, insurance and upkeep on the home you acquire from your family member.

You CAN create a limited partnership and define the ownership as you please, but the members can not sell their share; if a member wants out, the others buy him/her out.When we say Shares, think Stock Exchange share which are governed by the SEC.When forming a legal entity, you would acquire the right to sell shares openly ONCE registered with the SEC. 

Surely you will say, yeah but Dave wouldn't a six figure salary help you acquire some more properties?

I have experience in rehabs and short sales but never in acquiring a property through buying a non-performing note directly from the lender and then foreclosing.  

Kee:Ownership is severalty is defined as follows: When a person acquires real property and holds title solely in his or her own name, it is technically known as ownership in severalty.