They call the unspoken obstacle “renting while black.”It doesn’t help that developers are largely focused on the upper end of the housing market.One developer, Pardee Homes, is building $400,000-plus homes on the edge of the desert.

Welcome to the game Aaron.You're in a great market that is sure on its way up.Since you're on the ground you'll have the upper hand compared to all of the out of state guys. 

My wife and I rented out our family home when we moved 300 miles north into Michigan's Upper Peninsula about 5 years ago , a place we call Gods country.

In this competitive market, it's a real "leg up" to have an active agent that can source deals before they hit the MLS, as well as pocket listings, and other non-MLS properties. 

in SF have some insight.....On 9/1, I leased a three-bedroom apartment in San Francisco from the landlord who lives in the upper unit (owner-occupied duplex).

(Like Today) I am working on a fixer upper using a 203K loan.

The property was pretty much turn key ready, discounted, and my agent did much of the leg work. 

I'm not sure how you would approach your friend to buy their property, but in terms of financing, you could always try for a conventional loan program (lesser property requirements, so you could swing a fixer upper pending how extensive the repairs needed are).

We have spoken to one of the previous owners who advised that there is an unfinished upper area (somewhat described as an attic) that could potentially be turned into a 5th unit if one desired (apparently the hook-ups for water and everything needed to make it into a sep unit is there but was never done).

You could use her money as a down payment, granted you do all the leg work, and split the cash flow ( or future expenses) from day one.