So my plan is to get to the 20-30k mark and then invest again for a 4th mortgage from a traditional lender. 

"I help sellers who can't sell with traditional loans find investors who don't need to use conventional loans."

You will find great forums and blogs here that explain the real estate investing process both using traditional and retirement funds, for example. 

The owner owes $40,000 on the property and wanted to wait 9 months for the lease to expire before selling.My question: Since the owner is looking to get some cash out of the deal and most likely not motivated to do the seller financing route, should I just jump on this deal ( if the numbers work) and go the traditional financing route or try to get this property under contract for under $100k and wholesale it?

I have a traditional mortgage, a credit union and multiple bank accounts... but all here in CA. 

If you did not want her to show it you could have easily stopped her from doing so.You knew there was no balloon payment prior to signing the contract, sorry but to me this sounds like you have sour grapes since the buyer defaulted and now want to place all the blame on the agent.Lowering the price would have resulted in a more traditional offer.

This sounds like it might be your limiting factor in going the traditional 30 yr mortgage route.  

A Traditional IRA and a Roth IRA.

I also have a soft spot (pun intended) for BBQ turkey in any traditional BBQ style and for a good bowl of beef Pho. 

Usually a portion of the $700 would go towards interest, taxes, and insurance and the remainder would pay down the balance of the loan just like a traditional mortgage.