Structuring an unusual flip

[Paul Witte]

I'm considering a deal on a house in a desirable area. It's owned an occupied by an older guy in poor health who has no family or heir. He wants to give the house to a charity when dies. Instead, I'm pitching that he sell me the house now so he gets the fun and honor of giving the cash to his preferred charity while he's still alive, then renting the house from me. Once he dies, I'll take possession of the house and flip it after a substantial rehab. ARV now is probably 400-420ish. I haven't been able to walk through the house in enough detail to estimate rehab expenses. We're still in early discussions.

Here are my questions:

1. How would you estimate a purchase price in this case? My capital may be tied up for years possibly (though more than 3 years seems very unlikely), and who knows what market conditions or rehab costs will be like then…. Seems like I need to add in more margin than typical but how much?
2. What should the possession date on the contract say?  Should there be/could there be some clause about if he’s unable to live in it for more than 6 months I take possession even if he is still living?
3. How do I determine an appropriate rent in this case? Market rate seems unreasonable since no one rents houses in this area--it's just too expensive--and I'm trying to make this seem as palatable as possible to him. Rent it for PITI? For just the interest on my invested capital (6%ish?) plus taxes and insurance? Something else?
4. Any other thoughts/recommendations?