Buying my parents house

[Jonathan Cole]

My parents have been currently residing in their home for 25+ years. They hit a rough patch about 6 years ago and can no longer afford their mortgage. The maintenance of the home has gone to the wayside, there are quite a few cosmetic issues. We are considering a Fannie Mae loan to purchase the home and turn the partially finished basement into a mother-in-law suite, as well as fix the other issues in the home. They owe $88k and is currently worth $148k (using Zillow estimate). Has anyone dealt with something like this? We're not sure where to start or what the best approach is. Our goal is to get my parents out from under the house and the debt it holds for them as well as create cash flow for ourselves via rent or fix and flip. Please let me know of any additional information you need for you to form an opinion.