You would acquire a $280k property in exchange for an unspecified number of $600/mo payments and being unable to rent or resell this property during her lifetime.

sure thing.your developer/buyer/builder is going to need to pay out side consultants to prosecute the subdivision plat.. this may include among other things the following depending on jurisdiction:survey workengineering worksoil  testinggeo tech reports.city and state applicationsetc etc.. you want it in your contract that when this developer pays for these items.. that they are also your property.. in other words if he does not follow through he hands them over to you.. because these items are the property of who ever hired the consultant you have to specify in your contract that the buyer if they don't go through with the deal will hand this stuff over to you.this will help U resell if needed or prosecute the map your self without having to pay for these things all over again.

In my case, one of us puts up the capital and the other finds the property and resells to a tenant buyer.

I have a second property (lets called H2) that I'm rehabbing that I pay all cash for it and it should be ready to sell by next month at a resell value of $150,0003.

From a resell/investor standpoint having everything documented is important if/when you list your disclosures.

I think it's a good idea to talk to the city and find out this issue first.Regarding the re-sell value, a formal living room is not as popular as before, so it depends on your layout after conversion.

If you bought it to fix and resell its ordinary income. 

When I was very young, he use to buy homes and resell them to his 13 children at a lower cost.

This is because it will be much harder to resell the note, find a contractor, rent or sale if the population isn't very big. 

don't know but Oregon is quite strict in fact you need a developers license to rehab and resell homes .. even if your only doing one a year.. you can only work on homes you owner occ if its to be resold to the public you need a GC license for a developers license..