New and Afraid!

[Victoria Taylor]

Hello everyone!

Long-time listener, first-time caller... My partner and I have been remolding both of our homes with the goal of making them both rental properties, but the process has been long.  We've recently come across what seems like a great investment property:

- Tenant Occupied, paying FMR
- Slab home that we will eventually remodel ourselves after the current tenants leave. 
- Only 4 houses down from my current home in metro Detroit, MI.

We toured the property and it was a hot mess, easily a complete remodel because of cigarette smoke damage that seems to have reached every corner, but the prospect of redoing it really excites us. Here is our current dilemma that I'm hoping someone could provide some insight to: 

- We both have the funds to purchase the home with cash, but those funds are tied up in CD's until March, so we will need to apply for a loan in the meantime. We both were approved for a 180-month 5.85% loan, as well as a 7% 30-year fixed mortgage, but we will continue to shop around with the idea that we would just pay off the entire mortgage once our funds become liquid. Good idea? Bad idea? Alternate idea?
- The current tenants are said to be family friends to the owner and they do not have a written lease. They are also elderly with visible health issues and I'm terrified if we were to purchase the home and it would result in an eviction. Is there any supporting documentation that I could have the current renters fill out prior to purchasing the property? Is there a tenant/landlord disclosure form that outlines what that would look like?
- With what the home currently looks like, I feel like it's unlikely that the property has passed any type of city inspection, but the current owner disclosed that it has passed all city inspections. As a buyer am I allowed to ask for that type of documentation?

This would be our first investment property, and acquiring it this way is so new to me. I always new I would turn my current home into an investment home, but I never thought I would have the opportunity to purchase one with tenants already occupying it.  If anyone has any advice or can point me to a portion of this forum that would help me get my footing, I would greatly appreciate it!