Buying First Home at 64% of ARV

[Anthony Souknalong]

Hey everyone! I need some advice/tips/strategies.

My fiancés aunt has offered to sell us her home for 250k. I ran comps around the neighborhood and plenty of comparables sold 390-400k. We've been approved for 325k but we just aren't comfortable buying a townhome and spending 2k a month and the sfh in our area are shacks for that price. My long term goal would be slowly rehabbing the home as we live there and potentially renting it out once we're ready to move out. In my head this would be a BRRRR down the road but since its a family home, my fiance is worried her family will still treat it like it's their home.

She obviously doesnt want to move back into the home she grew up in but this is such a killer deal. 

Here's the number breakdown:

PP: 250k
Rehab: 60k
ARV: 390-400k
Conventional loan @ 5.125 %

I guess my concern is - how should i structure this? Should I stick with my traditional loan or look at other financing? What negative pitfalls can I run into? Would you take this offer if the opportunity came across your desk?

Sidenote: I am a licensed agent.