Yor offer starts off with, "I'll pay your commission" and here is what I'd like to offer your client. 

Then there you go.One thing I am looking to try to do but haven't done yet is buy something with zero down on seller finance, put the rehab on a 0% credit card, then refi the seller off in 12 months and pay back the card. 

@Bonnie Low - it's important to know what services you're paying for.

Regarding your other questions:  - If the going value is $260/SF, why would you pay more than that?  

I would focus on the house hack and not take a pay cut.

Use that loan to pay the back taxes and get things under control.

It's pretty common practice to have something like that in a property management agreement, and if it falls under that limit they're going to pay it and not notify the owner except in regular monthly updates because it is below the threshold of what is an ordinary expense in the course of business.

There are quite a number of things that can make utilizing an FHA loan more difficult such as more barriers during appraisal, appearance of low qualification/little cash, typically longer closing period, likely higher interest rate, and PMI cannot be dropped without a refinance if 3.5% down.That said, just chain 5% down conventional loans, and make sure your duplexes pay for themselves.  

It’s paid off, I would “like” to leave it that way & maximize the cash flow while paying down the heloc between the rental & other income.  

If you are prepared for the costs involved and the modifications needed to the property to make the basement unit conform, the pay off of creating an extra rent producing unit is huge.