Short  sales rarely produce discounts all things being equal.

The answer is: find a different (ie. better cap rate) market, and/or find GENUINELY discounted properties.

I was more or less using the 70k rehab as an example of a cost we see on our end that most of these banks aren't going to discount up front on their listing price.  

Are you able to get discounts from the parks?

I'm not sure about your local Coldwell Banker in MN but ours here has a part-time agent program with discounted desk fees and training geared toward part-timers. 

At least this way Mr A gets some money back and I get a home on a discount because I would only be paying 1 years worth of a land contract @ $400/month + $1600 of back payments and 2K to Mr A.Mr A is going to provide me with a copy of the land contract on Monday.

If there is strong interest or multiple offers, you will need to make a cash deal and go above the asking price to have any chance as the asking price on a short sale is normally discounted.

Are you finding discounts with few repairs needed, or are the only opportunities those with significant rehabs needed?

It can't hurt buy I'm guessing you are going to have to offer the property at a discount in order to get a rent to own tenant vs just selling the property.

It probably says something if you can't find a used copy for a discount.