So I'm a fan of buying in the path of progress from here since it's starting to expand outwards into cheaper neighborhoods.

And any of those mortgage brokers you find should have 5-10 DSCR lenders they work with. 

Did they find a better place, a cheaper place, a better and cheaper place?

If a seller refinanced a house at around 220k and has about 120k left in mortgage, but the house also appreciated to 450k, how do I structure a subto/seller finance deal?

FHA loans typically require the property to be a primary residence for at least one year, so he should confirm compliance with his lender.Once rented, he can deduct expenses like mortgage interest, property taxes, maintenance, and depreciation starting from the date it's available for rent.

Tough situation.Sounds like your mortgage forces your hand. 

Quote from @Louis Hamilton: The property is worth around 800,000 and has no mortgage on it.

my condolences on your recent lost.there are a few ways you can do this, as mentioned above you can take a heloc on your primary residence which will give you a second mortgage, first mortgage payment wont be impacted. you can do cash out refinance which will give you one mortgage and payment. it will pay the old mortgage and give you money in your pocket to pay for the rehab.or you can do a renovation refinance which is similar to cash out refinance but we would contractor involved  as part of the refinancing and they are paid through the loan

Maybe a mortgage lender can chime in.

If it is a larger bank/mortgage broker, you should be fine.