no absolutely not but at the same time I'm going to be cash flow positive based on conservative estimates and only have about ~10k into the deal.Here in NJ, the higher HOA fees are offset by the lower taxes on the condo. 

If he offers to charge you a lower interest rate, accept it graciously.You are only paying him interest on the money borrowed.

One consideration is if it's up to 4 units, I could refinance later on with a conventional loan to get a lower interest rate, so all things being equal I'll hunt for that. 

Hopefully @Dave Foster will chime in if I’m wrong but my understanding is you’ll be taxed on cash you keep or any lower balance mortgage you obtain.

I would not lower my rent for current tenants.2.  

IMO if you chose #1 now you can always choose options #2 or #4 six months(maybe a year) down the road, pull all your 60K back out plus what ever appreciation you have(if any) and move forward. to me in option #3 you said paying interest bothers you and option 1 solves that problem, gives you practice with a new tenant so if they don't pay or u have problems you don't have 2 bills( your old mortgage and your new mortgage) to manage along with the stress(of kicking out your friend and finding a new tenant) just the one mortgage that your fiance already has within his budget(because your 60K didnt' factor into bank financing so you found a home to move to that was within his budget alone(even more safety net) or at least lower mortgage payment and house than if you had 60K to use to buy-down another home. but i digress....Option #1 is less stress , less interest payments,and less of your money with 2 options left over at a later date. like joe said your 60K is safely locked away in the home(minus depreciation) which you can always pull out later on when you are more risk-prove.Still your choice but that my point of view.Good luck!

I guessed on the lower end since I don't assume this park has the most amenities and that much demand.

I was wondering if buying e.g. some land (value approx 25-30% of sold property) would allow me to lower / defer taxes?

I wanted to get input from you on investing in lower income urban neighborhoods.

One of my clients lost her job and she has only paid about 20% of her total mortgage she wants to get a lower payment.