When the 3 of them have a spat and the boyfriend leaves, and the daughter wants to sue the mother like on judge judy (this happens regularly I am sure) then you have a tenant with no voucher who needs to move.I would run, real fast away from letting them move in  . . . however, I would bet they already live there and have been doing so for a while.  

Thanks @Judy P. and @Fasil Khananother impediment with occupied REO's is they wont finance. ive been able to get vacant REO's with financing 25% below market. with only 25% down - one could buy 4 deals by financing with the same money as cash. theoretically speaking.so unless cash deal occupied REO's come with a 50% discount from market, that, there is a deal breaker for me. 

@Judy Graff  it has been a guest house since the 1950s.

So it's not my job to hold the buyer's hand.It's sounds line one of these cases I hear on court TV, like Judge Judy.

@Andrew Judy Welcome Andrew! 

@Judy BeebeConforming loans… fha 3.5% down, conventional loan 5% down and in certain cases as low as 3% down.  

Judy Solis

The real risk investing with a non-spousal partner is no partnership agreement or contingency , thinking it will all work out.Until you are in front of Judge Judy and find out you invested with an ex roommate and have no legal protections.  

If the SD will cover wear and tear and the rent you have no obligation do file other than to alert other landlords to the game played by this tenant. 

@Judy A.