I’m currently cutting my teeth as an agent!

To be clear, I am not a REA or broker whatsoever.  

If the property you are going to buy with a conventional will be an investment property/loan, then no problem whatsoever. 

Here is what I generally use in Memphis for my ratings:A+  no cashflow whatsoever if you bought here, good appreciation, great schools, larger houses, beautiful homesA great neighborhood well kept mostly all homeowners, more likelyhood of appreciation, not as great of cashflowB decent area but some homes are not perfect, quite a bit of renters but still homeowners, decent cashflow, decent/some appreciationC Very few homeowners if not any, more run down houses, good cashflow, very little appreciation, D&F  Warzone, dont event want to get our of your car, lots of boarded up houses, cashflow looks amazing on paper 2-3% rule "on paper" ARV < $45k

The reality is, the nephew/tenant has no incentive to cooperate in this scenario whatsoever since he's living there for free and it's not in his best interest if the house sells. 

We are looking at possibly new young tenants that have no credit whatsoever.

Having spent my early career cutting my teeth litigating major insurance companies for refusing claims, I personally have always placed properties into LLCs.

The seller will need to do this with plenty of time before the sale as dual tracking is prohibited in CA.Also in CA OR and WA  there are are laws with a lot of teeth in them on how you may deal with distressed borrowers.. its not like the folks in TExas who are chiming in here.. 

In TN you are under no obligation whatsoever to accommodate the tenant's appliances.

So there are ways to deal with it.Be careful when/if choosing to use a Quit Claim Deed for this operation:A person receiving a purported real estate interest via a quitclaim deed may receive no legal right to the property whatsoever.