Home that is underwater

[Suzanne O'Connor]

Hi, I need some help.  

I have an opportunity to take over a mortgage on a house in Gainesville Fl.  The house is worth 106K but the seller owes 118K at 6.5% for 23 years.  He wants out of being a landlord and willing to do a subject to deal. House needs some sprucing up about 4K in repairs. Problem is there is quite a few houses in that subdivision that are being sold short sale which could bring the price down more.  I would like to resell house on purchase option deal.

So my question is how would you structure a deal with this scenario?