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 

I'm not sure that a conventional loan can be below 5% and if it's an FHA loan, you're required to keep PMI forever or refinance to a conventional loan in order to have it removed.That said if the loan is conventional, you have a few options. 

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.

When you factor in closing costs (up to 5%) when you buy and commission (6%) when you sell, the property is going to have to appreciate fairly significantly to come out ahead in a 5-6 year span.

You can definitely factor them into the equation if you would like to.

He's owned them forever.