Thanks @Rick Baggenstoss definitely want to get the property from the owner prior to the auction!

BillAs a prior commercial real estate lender for many years.

And you're absolutely right, those major capex can really eat up all that prior cash flow.  

Obviously, your screening criteria might be tricky, but you can measure income, longevity with prior rentals, longevity at jobs, eviction counts, felony counts, etc and arrive at a score using a formula. 

This is your record of the property prior to someone moving in. 

Sounds like you have $109K in this place, plus your purchase costs and whatever you spend on fixup prior to the sale.  

figure out how long similar properties in the area, at similar price points have stayed on the market, prior to saleDo those things, then run your numbers using the new data.My personal opinion is, assuming the numbers are accurate - which I don't, an experienced rehabber could net $13k. 

If the couple moves out and you knew he lived there prior to that then he very likely has tenant rights, that will vary by jurisdiction but I'd say the vast majority will treat him as a tenant.  

Include when the option will be exercised, usually prior to construction, and what terms must be met for the option to trigger the sale.

He said they did not have the time, prior accountant's mistake, their other clients never had this kind of mistakes.