Opinion on a possible "subject to" deal. Good deal or bad deal?

[Bobby Njoo]

Hello BP Family,

I need ideas of how to approach this opportunity. Initially, I see it as a bad deal. However, I started to wonder how I can turn it into a good deal. The seller is my coworker, who has been mismanaging the property and is in distress, and I really want to help her out. She came to me hoping I can help her since she knows I am an REI. I have never done a sub2 deal before but I see this deal as an opportunity that would define me as what an REI should be, which is someone who is a problem solver that provide value and solution to someone in need. Anyways, here is the property's info:

Background:

- SFH 3/2.5 1600 sqft

- Purchased with VA loan in 2016 as a rehabbed property for 186k.

Current condition:

- current mortgage balance 178k

- late payment balance 15k

- original mortgage payment 1305

- current mortgage payment 2345 (new rate to catch up behind payments. Will return to original once late payment is paid)

- currently rented to bad tenants. Lease ends at the end of FEB.

- require 5 to 7k in rehab cost (full paint, partial floor/carpeting, reglaze tubs, patch drywall, and washer and dryer)

Projected condition:

- ARV 215k

- Market rent $1450 to $1575

- possibly offering it as a lease option to help the spread between mortgage and rent.

What I like about the property:

- major components are in good condition. (Roof, windows, doors, HVAC)

- large fenced in backyard

- 2 car driveway in a location where driveway is not common

- Overall, interior is up to date and property is in a good condition and area.

How would one should approach this to make it work for both parties?

Any feedback is much appreciated!

Thank you in advance!

Bobby