Soft costs including designand engineering plans ($1 sqft), plot plan($600 deal from connection ) and soil test for septic ($500 to plumber for excavation and 200 for city).

. :)If you've got the time, do a conventional 'soft money' cash out refinance on one or both of the others.If you don't have that time, get hard money on one or both of the others & refinance the hard money after.

The rest is ensuring that there are not other dangerous conditions in the home, such as soft floors.  

The memorandum (some use a letter of intent) approach is considered a "soft lease option" because the memorandum is generally a non-exclusive agreement that gives the seller the ability to walk away at any time if they choose to do so (even once you've spent all your time and energy finding a buyer and the seller decides to walk away at the last minute), but also gives you the ability to gain an assignable interest via the memorandum in a way that feels less scary to a seller (and generally you can structure the terms of the memorandum to have the rental payments begin the moment you assign, so you don't have to make payments while you're trying to find someone to assign to).You can also gain an assignable interest through a "hard lease option" that is exclusive between you and the seller, and will usually require you to start making payments at a specified date.

Don't give up and go hard money until you find someone genuinely running the numbers for soft money!

It was a small house, so my construction expenses were only $61k and after all soft costs I made $27,000, so it can be done! 

That just leaves the walls... if they're in good shape after removing the wallpaper, consider a soft pale color--maybe something out of the floor mosaics--to relieve the antiseptic white a bit.

It sounds like you are getting too soft maybe with rent payments.

This will vary depending if you include only hard costs or add soft costs, land and financing.  

Use soft or hard $$ if the numbers all work out for the purchase & possibly rehab (or force some equity into the property)3.