The best thing you can present to a private money lender is a proven track record and a proof of concept.  

What proof of concept does he have? 

As someone who is relatively new to the Chattanooga market (<1yr), but not new to SFH investing, here are my observations:The goodThe average $/sf is fairly reasonable compared to markets of similar growth trajectory (again, all a matter of perspective and expectation)The rent to purchase price ratios are reasonable (>1%) in many of the sub-marketsTheir is still an inventory of distressed properties, unlike some marketsThe challengesThe desirable areas have a large inventory of "flipped" houses currently on the marketA lot of the sub-markets are street-by-street, and the "up and coming" areas are either very early in the cycle or are over pricedThe 2% cashflow properties don't currently have a good resale value, so recovering your initial renovation investment could be difficultTraffic has gotten bad, and will continue to be a challenge as Chattanooga continues to growIf you are serious about investing in Chattanooga and want to do it successfully, you are going to have to do a substantial amount of research and invest a significant amount of time into learning the markets. 

Tonight at GaREIA.com (click calendar) the new investors meeting see location on the calendar event is a landlord panel talking about your questions and more.Read the paper off my profile 1st paragraph buying a bullet proof rental portfolio, which also answers many of your questions.In short a quick go no go is the 1% guidline,  $rent / $all in  is 1% +/-. 

But that's a lengthy process and requires a lot of documentation and proof that they can't continue to pay the bills.

It is quite another to buy at point in a market cycle that is likely nearing or at a top. 

I can have my listing agent, but won’t the locksmith want proof of ownership, before doing this, and will they feel comfortable with someone being my proxy?

It is very difficult to predict the cycle.

Am I crazy to think that they broke the law and then conveniently gave us proof of their crimes by giving us the list of things they want fixed?

If you are conservative and looking for a pure multifamily play, there is a sponsor who has multiple cycles of extremes with no money lost.