That's how the banks do it.

 @Sri Reddy it all depends on your goals.

I would do the deal if I were in your shoes.

We cannot breach our guests' trust by playing games with them. 

What do you want to be , a house flipper , or a landlord ?   

Do more.

If you do, you should expect a very aggressive challenge by the IRS.At $350K of combined value it might be worth the cost to get a segregation study if you intend to keep these a long time.

I’ve seen it done.

Quote from @Chris Seveney: Quote from @Eric Henson: Do you guys ever take the risk of buying a foreclosure at sheriff sale with the previous owner still living in it?

If you are able to manage it yourself, I think you will get a lot of very helpful education in real estate by spending a least a year or two doing that.You'll be able to work with property managers a lot better if you've done the work yourself for a bit, and it also helps to get familiar with the various laws and regulations you have to comply with as the owner, even if you do have a property manager in place (e.g., the new RI rental registry and associated lead paint inspections/certificates).It's up to you whether you're able to do it, but I think you'll get a lot out of the experience if you can try it for a year or two.