That would be your downpayment and or market value the day you buy.  

There are a lot of market-specific issues you'll have to grapple with and also, there are plenty of landmines in MFR on its own in CT that you'll have to be ready for, in addition to the nuances and complexities of developing something like this.

Quote from @Brandon Croucier: That’s a killer loan if they are actually offering that.Seems extremely below market value as even primary mortgages are higher than this right now.I would beware of a bait & switch on this. 

Go off the % allocated via the county assessor's determination of market value?

Even if the rental has a decent cash flow with additional flood insurance, we're still not sure we want to take on that risk as we are out-of-state investors (planning to move back to KY in the future, but not now) and we don't like that it will potentially bring down the perceived value when we try to sell it in the future.The seller has never lived there and has not provided any information on if it has flooded before or not. 

In addition, if this was originally an owner occupied house, there are often homestead exemptions where the first  $XX,XXX. of the value of the home aren't taxed.  

The strategy may change, but every market can work.

Please ask any additional questions.

and I also rent to voucher holders in the Milwaukee market. 

From a tax standpoint, there are additional disclosures to make when selling a business asset for less than fair market value to a related third party.