The LLC is irrelevant unless you are paying cash or getting a DSCR loan.

So a loss of about 55k We did a lease to own option so I could immediately take over expenses but keep their primary resident loan and interest rate.We agreed to a deal which would cover all their expenses at closing, their remaining loan balance, and $45,000.

@Jon Ankenbauer you won't be able to keep the land separate from any future construction loan.

@Craig Holland Land is often sold with owner financing, in part because buyers have a hard time financing it, and in part because buyers often only need a short time before they can build on the land and refinance out of the seller loan. 

Here’s a breakdown of the main ways investors fund their first deal while minimizing their own cash outlay:1.Private Money & Hard Money Loans– These lenders focus more on the deal than on your personal finances.

Instead of a traditional down payment, I would give them some money (maybe just to bring the loan back to even).The upside if taken over the loan at the current balance, with some rehab and hopefully getting the front lot back would be a nice ROI. 

The substitute of collateral was more of a scenario where you sold for $155K, and instead of paying off the $88K loan in your scenario, those funds stayed at the title company and were used on a cash purchase happening nearby in date. 

Also seems like a lot of MF sells occupied with tenants in place so you just have to comfortable with that and contracting up from and seeing inside after contracting.    1st step is to find a great lender and get pre-approved for a loan so you know what your budget is. 

If you lie on a loan, it can be mortgage fraud. 

If he has a $5MM loan in place, what was that used for / is it coming due/ was it short term/ etc.?