As for smoke damages to the paint and other surfaces, this will likely have to be recovered upon move out since you'll have to repaint the areas affected by smoke and clean cabinets etc if those smell.

So long story long, my questions are:1) Would it be better to have the end buyer purchase the land to ensure they have skin in the game and will see the project through to the end and still be our buyer?

On the surface, the cash flow is appealing but there are some major downsides compared to stick built homes.  

Just think that another way to do this deal would be with HM, and that comes with a pretty hefty price tag (~12-18%) and the requirement to have a higher percentage of skin in the game. 

The house was built in 74'But I agree what may be lurking beneath the surface is a whole other story.We believe with proper remediation (if it's necessary) verification it could still pull in the the ARV.

I would also submit a generally accepted EMD and have skin in the deal.   

Skinned knees don't bother me.

My understanding is the lenders do deals at 65:35 or better for them ratios without worrying as much about proof of income because the borrower has more skin in the game so they are unlikely to default on their debt.I've yet to find these types of mortgages though without getting into hard money lending territory.

On the surface this looks like a good opportunity.

Had the tenant have a bit more skin in the game for fixing them.