It could be a good place to start for what you're looking to do.Some states do have redemption periods during which the owner has time to come up with the funds to payoff the mortgage and redeem their property after a foreclosure sale.

If you can, offer him terms, e.g. 8% interest, with the option to buy him out after a specified period. 

On the other hand, the education you might gain may be worth doing it. 

And I guess there will be capital gain tax on any profit we make because we are selling before 1 year period even though the property value is below 250 k.     

You should be able to terminate the lease based on the fact that the unit is uninhabitable for an extended period of time. 

It's a cherished time machine of nostalgic memories of the very best of good times spent with inseparable friends during an unforgettable, seminal period of the tenant's life. 

In that time concentrate on continuing to educate yourself on this forum.

Continue educating yourself as much as you can, as I've been taught since I can remember "the lack of knowledge will always cost you money". 

So glad you've already plugged into the Bigger Pockets podcast - that was a huge source of education for me when I first started.

When people ask for a period of time to check for dealbreakers before EM is non refundable I tell them to do that’s before going under contract.