This is a shiny object of distraction, rationalized to look better than lipstick on a pig.

My reaction is that this is a bad idea.First, you are becoming a business partner with someone who does not appear to be in a rational state of mind. 

Or if it is move-in ready, refi after you buy (and after any seasoning period required by the bank.A couple of things you'll want to look into first:  Make sure your debt to income ration is so high that a bank won't do a refi. 

I think the bigger point is that FEAR isn't always rational.

You have to look at risk/reward ration ( what is my upside versus downside and conservatively how long will it take to get there?) 

@Allison PanilaI’m not sure if it’s legal for the landlord to raise the rent in your area ,but it’s safe to say your friend is breaking the lease and is trying to rationalize bad behaviors .Id try to get her and her boytoy out too.

Personally I would keep looking and stop rationalizing how it can work in your mind .

You have $350,000 in cash available to invest, and your bank has said that the potential financing terms would be 80% loan-to-value, 1.20 minimum debt coverage ration, 6.75% interest (fixed for 5 years and floating for the remaining 15 years of a 20-year term), with 1 point payable at the closing.

rational people do not think every inherited tenant is bad. but rational people know that inherited tenants remove a degree of control and thereby increase risk. you are safer in assuming they are bad tenants, than in assuming they are good tenants.

Of course, one's network connections are super important is such a market where rational and irrational seem to cross paths.