She was very desperate to move in because her previous residence had some sewer issues and had to live with her son in law.

The only reason I can think of is because you don't have the money to fund the rehab yourself, so in essence, you're partnering out of desperation, not good business sense.But, there are a couple of downsides to partnering with a GC.

It's the same as anything else...desperation is going to cost money.

As other people have said it is very low risk, you aren't putting any cash down and you would be able to refinance to get better cash flow, or if you are desperate, you could sell it (for a profit).I would buy it, rent it for 2 years (so you are considered an experienced landlord and can use the rental income in your debt:income ratio) then refinance into a better mortgage.

The house was purchased at end of 2012, we were able to negotiate a price as the seller was desperate to get it off his books before year end.

First is the desperate seller who has to offer financing so there will be a greater pool of buyers.  

The seller wants to settle as soon as possible (eight days) he desperately needs the money.

To sell within 6 months of purchase.My question is this, If she was not desperate to get paid right off, could I suggest for her to sell the property to me, defer payment till property was rehabbed and then sold?

I don't know many sellers willing to do that.4 to 5 years ago I did see many sellers desperate to sell who would do some kind of wrap etc. to get the property to sell in hopes that markets recovered in coming years to get out of it.

Parking the 'burb closer would save enough gas alone to help us save up for that economy car we so desperately need.