Learn from everybody else's mistakes! 

While we definitely have four seasons, the lake effect saves us from receiving the worst of most winters.

In the latter scenario you'll get some real experience dealing with the worst part of real estate.

If you get a great deal with the worst case scenario estimate of the possible foundation expense it might be OK to acquire it. 

I hope I didn't make a mistake by saying no to them- something just didn't feel right.

Thanks for the input, I know repairs will all probably hit me at once, but do you think there's ever enough saved up where you think its enough of a nest egg to cover the worst scenario?

If he can't get a house inspector or similar to do a walk through, he'll assume worst case scenario based on his notes and go from there.Said the entire process will probably take him anywhere from 3-10 man hours (most of that time is spent contacting, communicating, and reviewing estimates from the contractors in step 2).

With my apartments, I give myself 2 weeks for a worst case scenario.

I hope it's not too late to invoke the partner aspect, it allows you to be a lot more demanding in terms of your due diligence, and it allows you to not be the bad guy if you have to turn them down ("I wish I could have helped you but my partner said no and we can't invest any of our money unless we both approve the investment").To your original question, IF you decided to make a loan like this, I would see three options:Unsecured personal loan (weakest/worst/don't do it option)Secured loan - they buy property and you are the lender secured by a mortgage on property (better)Rent-to-own - you buy property and they rent from you with an option to buy (questionable esp w/ family, may be tricky or illegal depending on how structured, etc. and see next point re: owner-occupied)However another aspect is that since this would be an owner-occupied property, there are a ton of consumer protection laws (Dodd-Frank) that apply.

Menace to society that guy...Trust me, there are worst things out there.