I guess some of my concern is the unknown.

*Your exact probate cost is unknown but the average cost of probate is 4% to 10% of the gross estate?

Fear of the unknown is a real thing. 

You touch on a hot button for a lot of new investors...fear of the unknown.  

I know that investing and, real estate in particular, is full of the unknown, especially for a newbie. 

Its an REO, two 6-plexes with 40% vacancy, only 2 of 5 vacancies are rent ready (~$20k repairs needed for the other 3) and unknown operating expenses.

This could include extensive or unknown repairs, building in an unfamiliar city with an unknown building department, a historical house, or simply your amount (lack of?)

If you are saying that it is $150K up front, and two more payments of $150K than that is called a net commission deal in that he is getting the overage of what you wanted on a net basis and what the bank has agreed to pay and is outside normal practice but not unknown. 

Financing does not add value to real estate, but can to your intrinsic value in an amount equal to your financing alternatives or what other financing would cost.Sounds like it's overpriced.I don't care for condos due to the unknown of HOAs.Is it a FHA approved complex, if not financing will be difficult and he may need to finance to sell it, that means you'll be stuck on refinancing or in your selling too.You also want to know the % ownership of owner occupied as that can effect financing.Your refi options in 5 years may be limited too, you may need 25% equity for a no cash out refi, so check with area lenders as to what they expect to be offering. 5 years is long.Look at the By-Laws of the HOA, they may be able to adopt rules with a 51% vote of owners, what do you do if they say no rentals?

You'll need to know how much it will cost to rehab the property as well and this can be difficult on auction homes as many times you cannot get into the property to inspect them.Sounds like this might not be the best first deal for you since there are so many unknowns.