So if you know or have used this already please feel free to give your advises. 

In regards to your concerns, you should put together an MOU regarding the terms of your agreement with performance clauses protecting both parties, and eventually lead to a JV agreement.There are several other methods to protect yourself as well as the owner/seller, however, too lengthy to write about.Don't be too greedy, otherwise it will limit your relationships and longevity. 

If I am the listing agent I am advising my client not to tie up the property for an offer that has a low chance at going through.

If you do not perform, they'll just move on.

Perhaps the question would be, based on the described circumstances, how do you convert a non performing asset such as this into a performing asset?

In my opinion, CAP rates and NOI are a great way to compare properties to each other you're when doing business with other investors, but Cash on Cash is a great way to see how one property will perform for your personal operating assumptions, compared to the next.

My advise is to go very slow and find some out of towners who have been successful in what you want to do and pick their brains.

The note was non-performing so the bank sold the note off likely at a good discount.

People can say what they want I've negotiated down to $5,000 for a non-performing assets. 

So if you have any advise for me please feel free to message me.Thankyou