I think you have a good plan, BRRRR is still a great route in the current market, and especially for the states you are already in - both Indiana and Georgia are very well positioned for BRRRR deals in my view / experience

The positive is you can get them out with 60 day notice so 60 day escrow would allow the unit to be delivered vacant (assuming zero issues terminating the rental)good luck 

He'll have at least $2k per month in positive cash flow and tons of equity when it's time to find the next home in some years.

If you rented this home and it was putting $3K positive cashflow yearly in your pocket, the returns would be 3/4=7%.  

But it sounds like they are just positioning themselves in the middle of your 'deal gone bad' to make some money for themselves.  

Putting people in a position where they would need to sell or come up with an alternative strategy to pay off the mortgage balance prior to rebuilding. 

So lets hope something positive happens, but also make sure to plan for the worst case as well.

I would lean towards recommending that you pursue the deal - plus having the property remain in your family may be a net positive for you and your extended family regardless of the ultimate financial return. 

:Class A Properties:Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Vacancy Est: Historically 10%, 5% the more recent norm.Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.Class B Properties:Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, decent amount of relative rent & value appreciation.Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 yearsClass C Properties:Cashflow vs Appreciation: Typically, immediate cashflow and at the lower end of relative rent & value appreciation.

I hope to use private capital to fund the entry fees in second position.