"Subject To" Offer on a House Needing Work

[Brooks Rembert]

BP family, I've got another silly(?) question...

I have a guy who's sister passed away and now he's got her house in Virginia. He's in Arizona and just wants it sold.

He knows it needs work (by my estimate about $20,000 worth) and the remaining principal is only $40,000. The house was appraised at $115,000. PITI is $600 per month, and market rent is +/- $1,000 per month.

If I offer the guy $65,000 on a "subject to" offer with a promissory note to pay in 5 years, can I turn around and refinance it for $85,000 (+/- 75% of the appraised value) and use the $20,000 for repairs?

I know that sounds convoluted, but I'm trying to use as little cash out of pocket as possible to get the house.

I look forward to hearing the folly of my thinking