He claims to be maintaining it more than he is, and I called him on it saying I had driven by the house weeks apart and seen no change.

I found BP about 18 months ago while medically recovering.  

I would do the deal, but seller which claimed to be an expert in the business, was upset and turned off by my offer.

My suggestion would be to purchase the property yourself to avoid financing issues, and quit claim deed the ownership to an LLC shortly after. 

You then might be able to present other options to the owner of the property the servicer could not because of constraints with the loan servicing agreement.Before considering buying a loan you would need an audit on the note making sure you have 100% true chain of proper transfer where the borrower could not try to claim somewhere along the line the mortgage was invalidated or not properly transferred etc.Dave Van Horn on here has bought a lot of mortgage notes so might contact him if interested in that type of thing.

I confronted the tenant about why she had her bank pull back the transfer and during our heated conversation she claimed her bank gave her the option to pull back ALL of her transactions which would have been the deposit and 3 months rents!

As for seller financed notes the good news is Dodd Frank is being deregulated and as for institutional notes it's a supply & demand equation with a big factor being jobs & economic growth, but there's always people defaulting due to job loss, divorce and medical.

I have 2 questions.1) Should I pursue this in small claims court or engage an attorney.2) Do I pursue the late rent amount each month or pursue the entire amount after the lease ends at the end of May or when a new tenant moves in whichever occurs first.

I navigated thru the Kansas court systems website and filed my claim as a creditor along with attaching my supporting docs.

Offering keys for cash is tricky, If you do, make terms short, like 3 days out and I'll give you $500 cash,, not out on 3rd day, file.. be ready with new locks and have him sign that he's vacated and will hold no further claims against owner.