The lender won't accept a discounted payoff if the property has equity.If the property is worth $170K or more, then the seller will need to sell for $170K or bring cash to closing for the difference.

While we have smaller margins, we have no vacancies, no management fees and fewer repairs. 

We buy class A properties, although smaller margins also gives us less vacancy, no management fees and lower expenses.We also buy pure investments in South Carolina.

As far as my understanding from what you posted, I don't see what is the asking price by the owner (unless they are waiting for you to make an offer).You really have to make sure that you have enough profit margin/reserves in order to make it worthwhile for yourself while being more attractive than all cash offer.In regards to owner financing by yourself, you need to make sure you offer better rates than hard money lender, which you are with 8%, you can even go a bit higher.Your bullet points are good to convince the owner to go with owner financing, just make sure the finance is not too tight on your end to make a profit

You don't need a lawyer for small claims, document everything you can and get a judgement...ask for the max, don't discount anything. $3400 sounds low for all that.

Perhaps give away (or steeply discount) a few lists to get some positive feedback first?

Even at a substantial discount the property tax would eat you alive and result in negative cash flow.

But think of it as a marginal expense.

I have a Zero profit margin and am in the hole approximately $30K for the year. 

Should I utilize this option for a cash deal long term hold, or bite the bullet on tight margins utilizing a bank loan until I can refi lower down the road?