Rather than flip out, I just sat down and poked around the forums till I found out what others had to say about this common problem.  

So the question: is it common for flipping businesses who take on investor money to have the investor take out the loan in their name? 

As @Mindy Jensen has pointed out, yes each bedroom needs two exits, Egress window for escape and a door that will lead to another exit, it cannot pass through another bedroom or bathroom only to a hall or common room then out. they must have not had one of those exits in that house in Colorado.

I think what commonly gets overlooked by newbies and is generally not overly pointed out on the boards here is that the notes that many are investing in are "distressed" loans NOT prime loans.  

If they decide after 18 months they dont want to flex their option to buy, its even better for you because you keep every penny they spent on the house, and then you can start over and collect another fat payment up front with another 18 month lease option.

Your situation is sad and unfortunately in his business all too common.

I just didn't know if it was a common practice for her to be there or not.  

I suggested he fix the exterior and common areas while he's improving the two unrented units.

Old homes are very common in my area (my home was built in 1830) and many of them sag like this one but does anyone have experience with this?

If this is something that is commonly done, please forgive me, but I ask because, if I'm not mistaken, on traditional bank mortgages there does tend to be a penalty for early payment.