The newer places can and probably are more expensive, but they also offer great amenities in most cases and some people are willing to pay extra for those.There are additional strategies you can take. 

I would pay him higher than average rent in addition to a fee to have the right to purchase. 

In addition to education, networking is the key.

If he had a property, financed it for $80k, sold it to you sub to with no additional cash, his cap gain taxes are based on the $80k sale price.

Doesn't this put a cloud on the title in addition to put the seller in breach of contract? 

There are additional knobs that can be tuned here so make sure you know what they are and where they're ponited.

In addition to educating yourself jump in and start evaluating as many deals as possible. 

Foreclosure proceedings start.Figuring out how you are going to handle your 5 year  balloon should be done day 1 after closing. also many commercial loans will have covenants that require addition of equity if values drop.. also capital requirements for the owners..  

That said, I am looking for additional income streams.

That said, I am looking for additional income streams.