Paying off the debt is a good idea, but it also depends on what type of debt it is (interest rates) and how long that will take.  

We know there is potential and you make a good point, its easy to get cold feet.Bjorn what other types of opportunities would you be considering if you were in my shoes?

Consider the following:- To maximize rent, you need to maximize what the operator can make, which means making the home as nice as possible for private pay residents and maximizing to the licensable number of residents- You don't necessarily have to have individual bedrooms, some can be shared, but check on the square footage requirement for bedrooms- No, $1 in for this type of reno will not equal $1 out.

Your folks experienced one type of market and believe that since that market has changed, that there are no deals to be had.

@Shawn W.It is very common to include these types of clauses in commercial contracts. 

You may have to get a second personal loan or some other type of loan to complete the job.

Buy BoxLocation: Greater Twin Cities metro area (preferably western suburbs)Investment strategy: BRRRRProperty type: Small single-family home (must have opportunity to add value)Purchase price: $200K-$250KRehab costs: $0K-50KFinancing: cash purchase, refinance after rehab and rentingROI (cash property before refinance): >5% cash-on-cash returnROI (refinanced property): >0% cash-on-cash return, with >70% of total investment costs pulled out of the dealManagement Plan: PMIn best regards,Ben

It would be similar to option 2, but buying an option 1 type home. 

What made you interested in investing in this type of deal?

Needless to say, the fees can have a material impact on investor cash flows and exit values when a DST is sold.