You still may be able to force the sale.You can propose a settlement.

With these you qualify on the property's ability to service the proposed debt/mortgage.

I would do some investigations of your proposed cities along with others. 

Or, is it locating distressed properties and proposing to owner's to sell to you.

That was a new one to me, and seems to be a dicey proposal. 

On one hand, we have to document a present housing expense in order to use the proposed rents on an inv. property purchase.

They have proposed a quit claim on the deed if I give them 90k cash, which I do have available, but I will have to refi to give them the balance.

You might want to propose the idea of the 50k downpayment in year one and then traditional financing with him as the bank after that which will net him X/month but reduce his capital gains.

@Robert GodfreyThose used cabinets you are proposing look nice (and are an upgrade) but a few things you need to consider...biggest one being you’ll have to rip out that header above the current cabinets to get those 42” tall uppers in there (a lot of drywall work and mess).

Based on that determination, I determine a cost sharing proposal with the tenant.