A seller financed (SF) note is not the same as a purchase money mortgage, it is funded by equity based on an agreed sale price, this makes it an installment loan and a different animal than a cash funded note.Institutional notes have a due on sale clause, an SF note should have if it is common for your jurisdiction but it may not have.

Am I on base with my recommendation?

I realize that everyone is going to have different input and advice based off of their experiences, but I'm looking for assistance as to whether something I'm including is a definite NO NO, or if something should be added in for increased impact. 

Is there a specific procedure I should have followed?

You will only get so many based on current rules and your debt to income ratio.

@Harry Gamble The cost of insurance will vary greatly based on the individual property types, specifics, and locations.

Run the numbers and buy based on what is and not on a story of what will be or could be.Was it a project that got stalled?  

@Ben ZimmermanThe peace of mind factor was less "hassle-based" and more "financial-security" based, which is why I mentioned that having my primary paid off checks off the latter for me.  

The study was conducted by Zimmerman/Volk Associates, Inc. based in Clinton, New Jersey http://www.zva.cc/ .

It's oil based and costs $20 a quart.