The landlord tenant relationship has definitely gotten "chilly" and my patience has been tested one too many times, plus there are upgrades I want to do so I can raise rent, upgrades I can't perform while the property is being inhabited.

With fewer than 1200 inhabitants, if you get the property back that's a pretty small pool to draw a new buyer from.

To paint a picture, the house was most recently inhabited by a hoarder whom had left nearly everything for the next person to deal with. 

If it is not complete, then there is no Certificate of Occupancy (or similar doc) stating inhabitance is allowed.

All photos are various stages of "before" from inhabited... to vacant... and then foreclosed.

I'm new, but what I will say is that it depends on the condition of the rental. first thing is making sure that it's going to be inhabitable plumbing electric structural.

At this point John disclosed there the home was not vacant, but actually tenant inhabited.

I would tend to offer last month free rather than cash back today.My guess is the parent who is trying to get out of the contract got concerned because the property was inhabitable.

I unfortunately didn’t find out about this until after the fact (my lender was inexperienced with these loans - BIG no no when doing 203k’s - always choose an experienced 203k lender) but lucky for you, you know now and can just wrap it that way ur not paying rent + mortgage or mortgage + mortgage on a home you can’t even inhabit. 

@Christine G. you could refi cash-out at 80% LTV, that's a $176,000 loan and you can use the proceed for a fixer up with Fannie HomeStyle, you only need 15% downpayment, lets say you find a $150K SFR that needs $50K in repairs, your purchase price will be $200K, with 15% down, that's $30K, build 3% in seller credits for closing costs and you can roll the mortgage payments during the renovation into the loan if the house is inhabitable.