Your answer is just to shop it to other buyers at your new discount and disclose the septic IMO. 

We were wondering what the optimal steps were to take to get this property under contract at a discount that would appeal to both parties involved.

It is a tough state to find deep-discount property deals in, and it's a poor state for rental income.  

In fact we often find multi's without separate utilities selling at a discount for that reason.Separate utilities will definitely inflate your future re-sale value.

Since you are buying for yourself you are not acting as an agent but there is the potential that if you don't disclose that you are an agent, a seller might say that you took advantage of them by being 'more knowledgeable' and buying at a discount rate.That being said, I plan on still getting my license so that 1) I have access to the MLS 2) It can greatly expand my network and 3) it opens the potential for referral fees for houses that the seller insists on retail price.

My plan is to either hold the properties for long term rentals or possibly "wholetail" them depending on what kind of financing I can pull together.My biggest question would be what type of discount can I reasonably expect to get for buying all four properties instead of the seller having to sell them individually?

It is a very deep discount.

Wholesale lenders or standard lenders with a wholesale department typically give discounted rates through Mortgage Brokers since we are bringing the client and handling the loan processing for them. 

What sort of discount are you getting from your neighbor since he's saving realtor commissions?

Of course, within notes there are easier and more difficult approaches such as buying up performing notes from an investment provider (turn-key) to shopping for discounted, non-performing notes.In a perfect world, one would create a portfolio that has a nice balance of different properties and notes of various types in different markets to achieve diversity - as well as perhaps some traditional equities/funds, maybe some precious metals as a hedge, etc.A budget of $100K could most likely be placed into one or two key investments.