It is my understanding that Colorado has some specific laws in addition to Dodd-Frank that relate to owner financing.Personally, I don't see where a lease option would not suit your situation with minimal risk.

Not only can you get started in wholesaling with just a minimal cash outlay, wholesaling also offers a valuable introduction to real estate investing fundamentals such as running comparables, determining if a deal is good or not, establishing ARVs, and estimating renovation costs.  

What this typically looks like for your first few deals will be a three bedroom in a family park needing minimal repairs.

A little bit left for a down payment on a new property.Rent loss is a minimal additional cost.

Also, I’d like to minimize the transaction costs as the property is sold from him to me, because every dollar I save my friend by selling to me (vs selling to a 3rd party) reduces the price I pay for the property.This is a true friend, so I have zero trust issues and am 100% comfortable with doing the initial sale as cheaply (even if it means unprotected, deed-wise) as possible, AS LONG as it doesn't complicate the eventual after-repair sale to a third party by me.Hope that’s clear!

You can still offer a commission to a buyer agent and if you work out a deal with your broker, they will likely minimize the commission they will take. 

This is a cash deal and holding costs are minimal but included in my Rehab numbers.  

Or maybe the GC has been asked to do it by other investors because it was a minimal cost for a feature that they can market later.I'd recommend you knock on the next door neighbors' doors and ask whether they've experienced flooding and whether they have french drains and/or sump pumps.As for the cost, it depends on whether you're excavating the basement for other reasons.

The seller states that the tenant has lived there for some time and theyve never had problems with damages or collecting rents.. to me it eould make sense to leave the tenant as the repairs needed would be minimized and there would be no cost to Maret for potential renterz..I don't really have any control over that but I don't want to lose the deal either... how should i proceed??  

Minimal upside and taking on all the risk.Taxation will be dependent upon the structure of your investment.