If you're aware that he's doing improvements (as he's disclosed to you) and he ends up getting hurt by throwing out his back or stepping wrong off a ladder then you've exposed yourself to liability.  

My girlfriend's parents have been doing live-in flips for the past 10 years, and that exposed me to how profitable a little extra work can be.After another year or so of saving up money for a down payment, I plan on buying a house to fix and flip over the course of a couple years.

(It has a layer of lead paint underneath that but the latex paint is generally in good condition, so only a tiny fraction of the lead on the exterior is exposed.)

The laws associated would fall on your tenant and yourself so I also agree with ensuring to not expose yourself to fines from the city.

The condition we typically use allows for a concession of 3-months scheduled rent if a unit becomes vacant between the acceptance of our offer and Close.That said, when you collect estoppels during diligence, most "irregularities" between information supplied by the Vendor and the tenants' views will be exposed and you can simply negotiate a resolution at that time.

If that furnace is oil or natural gas/propane it will most likely be in the rage of 60 - 70% efficient.  

I have seen a bank bidding against a buyer on a mortgage foreclosure, seen the buyer go over the bank's max bid, and then seen the bank acting as the plaintiff stop the sale and request to postpone the sale to another date, voiding the bidding up to that point and returning the property to its opening bid the next time it's exposed for sale, with the bank as plaintiff paying the postponement and advertising fees.This happens when a bank owns first and second mortgages on a property, and it's the first mortgage that has forced the foreclosure sale, and the judgment for the first mortgage was a pittance while the second mortgage is for serious money.

Offering your contract at public auction, in my opinion is a great way to gererate interest and to expose the property.As a professional auctioneer - depending on what price you are in for and what you will accept as a net-equity profit - I would suggest a reserve public auction (you'll have more participants if you do an absolute auction).Not all auctioneers are good at marketing real estate - you'll need to interview them - you'll need to know the following:how much advertising money do they want up front to market the property, commission, time frame, how many real estate deals have they done, are they honest, will they do an assignment, are they respected in the community, where will they market your deal, get references, are they authorized to conduct real estate auctions?

I don't mean that to sound cold, but for me this needs to be a business decision, not a situation where I should expose myself to extra risk to be sympathetic.   

The members of an LLC are issued K-1 Form and have to pay taxes on all profits as though it were income, which could expose the owners to high employment taxes.