Target industries include IT/data, logistics/warehousing and advanced manufacturing.South Bend being a college town with several Universities/Colleges (Notre Dame obviously being the largest one) creates student housing opportunities for approximately 20,000 plus students among all the institutions.All this spells opportunity and many out of town, out of state and even international investors have and continue to try and claim their stake.As indicated by @Immanuel Price and @Aaron Linden the University of Notre Dame in partnership with the City of South Bend has contributed a lot to the revitalization of the City that is bringing new jobs and the need for new housing.

the biggest issues are that the available tenant base drops dramatically around October and doesn't pick up again till the end of the school year.People are no different than animals in that regard.They want to be settled and hunkered down in a property before the school year and/or bad weather starts.Quality tenants with good financial backgrounds don't want to move their families in the middle of an icy,snowy winter for obvious reasons,and good college students have already started school in August.Many of the few available tenants will have questionable backgrounds like recent job loss,previous eviction,bad credit,difficult income verification and don't make 3 times the rent,criminal records,etc.   

He gets back to me with a "discounted" bid from his internal architect and engineer of $2 sqft to get everything done.

Rotarian for 12+ years and love international projects and helping out in my local community.

Rotarian for 12+ years and love international projects and helping out in my local community.

Through market data I can't see internal or structural issues so considering the homes in this area are older that may be the culprit for the price inconsistency.

Unless you can provide your private lender with secured double digit returns, I agree with most, your dad may have to do this on his own, or simply have you intern with him on this deal. 

Just last week an alumni stopped by who is working on a 80 million dollar international real estate development project of his own where he got funding through investment firms.

Cash on cash, internal rate of return etc?

Joe's brother-in-law buying Joe's house at a short sale would be a huge red flag for fraud.I think the biggest arrow in your quiver is #1, and your most probable path to success is to order a fresh appraisal with a fresh opinion of value, and once it comes back go to your (or the end-lender's) appraisal department (not the AMC, the lender's internal folks) and argue that the new appraisal is more credible than the previous one because of #1 ("if the appraiser didn't even go to the comps for a quick drive-by photo, who knows what else he didn't even actually do?")