I live in the Las Vegas market and have investments and a real estate brokerage in Henderson.

I live in my own primary residence and that is fully paid off. 

If they do, you may have a chance under the scenario you're proposing - if they share your concern for it's condition (although that seems unlikely since they've been living with it the way it is for some time, it seems).If you own it, it's pretty lowbrow to expect a neighbor to invest in your property. 

Also, the state of formation is likely where internal disputes would be brought among LLC members, so if you and a partner and/or spouse live in CA, you probably want to arbitrate in CA if the two of you had a disagreement.

I believe he now lives in Portugal.

I think this arrangement can suit both parties, he wasnt going to be able to keep the house but can still live there for super cheap.

I own a 4plex where I live in one and rent the other 3. 

The auctions, although online now, are live foreclosure auctions, i.e. the auction style sale which is the culmination of the foreclosure process. 

I haven't lived in it long enough to be exempt from capital gains, good point on that.

My suggestions:* Requiring code compliance and safety equipment is absolutely valid and should be part of the regulations* Requiring owners live within 15 miles is not necessary since poor hosts whether they're local or distant will violate the 3-5 warning system and earn a suspension.