Just know the layers involved and be sure you are still able to complete due diligence on the sponsor. 

Permits may be needed for bedroom or bathroom modifications, especially if plumbing, electrical, or structural changes are involved.

What financing options are available when partnering with a solo 401(k)? Can you use conventional loans, or does the loan need to be non-recourse?

Some portfolio or private lenders may waive this rule, so it’s worth exploring.While waiting for the 6 months, finalize renovations, stabilize the property with tenants, and ensure all paperwork (leases, receipts) is organized.

The buyers had a structural engineer inspect and then asked for another $60k reduction to stabilize the foundation.

If you have it in emails etc. you could have a position - but as another poster mentioned, giving up $100 a month in rent to only paint two rooms is very very generous so I can see how they thought there would be more rooms involved.

Prioritize your financial stability.

A common strategy used by investors, such as those operating through PadSplit, involves purchasing the property, completing basic rehab, refinancing, and then using cash for the interior build-out.Another potential red flag, even without converting common areas, is the addition of individual locks on bedroom doors.

@Jonathan Cooper - Sounds like a short-tax year is involved.

If the same people are involved, it doesn't matter.