@Arun Kumar Balasubramani There are many different factors.

That may seem careless to some, but to us it would have been much more careless to continue living the comfortable/complacent lifestyle that we had created for ourselves.  

I estimated that it was worth $183,000 based on a few local factors and the sellers scoffed and stated their number was $215,000 once it went on the market.

Lenders can dictate terms based upon their risk factors and can enforce DOS.Owner occupied... add spouse/children after closing and DOS cannot be exercised.

If you were pre-approved for 400K for a MFR, that means the lender likely factored in 75% of the rental income and tacked that onto your income. 

Whether they will or not will depend on other factors.

We don't have a property manager and repairs are minimal so we clear over $500 a month with repairs and Cap Ex costs factored in.https://www.zillow.com/homedetails/2740-Nottingham...Thanks for your advice and opinions in advance 

The lease stays in place with the sale...you inherit it, so there is no change with the change in ownershipRun your numbers based on the current situation and lease..... then run it on a conservative plan based on increased rents and factor in turn over cost, renovation, vacancy etc..... based on those number you decide if it makes sense to try and buy them out with "cash for key" or suck it up for a year with the current lease or worst case walk away from the dealIts definitely worth a shot to try and renegotiate the selling price based on the current rent..... but sounds like it wont budge much....No way would I try and extend the lease even farther with a tenant that I know ZERO about.....

If you agree to his budget then any overages would be at his expense and not factor into the profit split.  

@Elisha CramIf you are operating this like a hotel or b & b, then you'll have to factor in self employment taxes as well.