However, I will say, if it is a year payment, it is advisable to hold the year's rent in trust and pull the money out as each month's rent accrues, just in case there is a dispute during the term.

Here would be the terms with the buyer:Sales Price: $315,000 (NOT worth this.

As has been discussed ad nauseum, you will want to make sure code allows a short-term rental wherever you are buying.

I'm looking for a framework of terms and structure for this scenario.  

If you can't be competitive on price, be competitive on terms. 

If you start with class D the most likely outcome is that you will learn a lot in a short time and then either trade into better neighborhoods or just get out of REI all together.

If they are already on an active lease (not month to month) you may need to keep the current lease terms until it expires.

Depending on the auction terms it could be that result plus the forfeiture of your deposit, or perhaps the trustee/auction company must elect one remedy vs. the other.

Price is $200,000 with $20,000 down on a 6 1/2 year term (78 payments) with 0% interest.

If you have a lot of equity in the property and the loan to value is low enough, you could get favorable terms on a cash-out refinance.