Seller Financing Deal Structure

[Tiffany C.]

Hi BP

I have a lead that I need help structuring and I'm hoping for some really good feedback! 

The property is a 3/2 in a Metro Atlanta suburb, C+ neighborhood. 

Asking price: $50K

ARV: $66K

Repairs: $20K

Potential Rental Rate: $950

Background: The owners purchased the home cash in 2012 for $22K as an investment property. The owners were unable to sell the property with a realtor. The home is owned free and clear, but needs some TLC.

I would like to make a seller financing offer but I need help structuring the deal. I want to take control of the property through a lease option for 3-5 years, no money down on the lease, $100 down on the option, pay the seller $225 per month once the property is rehabbed and rented. My exit strategies are to lease option the property to an end buyer for 2 years or rent the property and refinance it. 

My questions are:

1. Should I offer $50K considering the fact that it has to be rehabbed? (I'm familiar with the 65%ARV - (repairs + costs ) rule of thumb) However I've read that unless I am looking to wholesale a property I should be offering closer to the asking price when seeking owner financing. But offer $50K + $20K in rehab (not including additional costs... future closing costs when the end buyers buys it or the LTV requirements of the lender I wish to refinance with).

2. Is there any other way I can do the rehab without using my own funds? Would hard money work in this situation  (probably not unless I plan to exit the deal within 6 months - a year)?

Open to any useful feedback and thanks in advance.