The clear and obvious answer would be to instantly pay the back taxes and offer a small lump sum for them to move with and just lowball in whatever structure works for the both of you weather that is a better sale price or a greater monthly payment to them and just find your middle ground that works out for you both.

if Yes, what should be the structure, should he live rent free in return of the work and hours of work he provides?

It has 2 detached structures and one of them includes another half-bathroom.  

Per square foot can only be used for a gut rehab in the same neighborhood with no structural or other environmental anomalies...so almost never.

If you find one who is smart and hard working and who knows how to structure creative deals, it will be incredibly beneficial to keep them on your team.

Quote from @Scott Huff:  I see that homes in that area are estimated to be ~30% overpriced I'm very skeptical of the above sentence.

I look forward to seeing the knowledge-sharing and connections you'll make.If you ever want to discuss financing options or structuring deals, feel free to reach out.

Since there is even less documentation to look at/review with this, pricing is a bit higher than your typical DSCR LTR/STR product, however, there are numerous ways you can structure the deal to make certain the #'s work for you.

This structure can provide liability protection and potential tax benefits.Consult with a Lawyer: A real estate attorney can help you form the entity and ensure it's set up correctly for property ownership and management.2.

Congrats on getting the offer accepted, and it’s awesome you’re thinking ahead about structuring the ownership in an LLC.