Right now it sounds like he is tipping you off to issues and being a pain but if he sees you replaced all the plumbing without a permit that is a quick way to get a final stop work order and him require all licensed contractors.Other flippers make money by having people who can work at a reasonable price and they find good deals. 

If you don’t disclose and the buyer or seller finds out later and decides that you “took advantage of them” because you offered below market value they can file a complaint which could lead to a fine and loss of your license.

@Greg Dickerson Would this be easier to do at a lower price point, such as a final (built) price in the $500k-$1m range with a lot cost around $50k?

You may want to get your attorney or the sellers attorney involved to finalize this tenant issue but you should make sure that if Yuit get it under contract, make sure the contract is subject to possession at close of escrow meaning the seller is responsible for removing the tenant prior to you closing to grant you sole possession.You should also make sure you have a final physical inspection as buying sight unseen with an uncooperative tenant could result in major costs you are not aware of which could ruin the deal.

. * Don't allow financing or a finance contingency (it can be a good indication they are selling above market value)* Don't allow for your own independent property inspection* Are not realistic with their pro forma's (i.e. they don't include vacancy or maintenance projections or use unrealistically low vacancy factors)* Require you to pay for any renovation upfront* Sell only in cheap. low end neighborhoods* Don't accurately represent the neighborhood/property classification* Don't have consistent rehab standards for all properties* Don't provide a scope of work for the property* Can't provide references of repeat investors* Require you to close before a tenant is in place

It can be done and usually is done in a shady way but actually legal from what I have seen as the bank can care less as long as whoever is in the house is out asap on a final sale.   

So there is a fine line here.

I'd also verify that with a final walk-through a couple of hours before closing.I'm assuming that there is no such clause in the P&S, but if there is, I think you can sue for specific performance/breach of contract.Not to rub salt in the wound, but this is a perfect example of where a good buyer's agent is worth his weight in gold.  

There is also something in the back of my head that I am not starting soon enough and I am accumulating too much debt in the process of getting a Finance degree.

Just to be clear you say 60k for example you mean a final price?