He knew closing was coming up and assured me he had the cash.

Ask the attorney you find if they are willing to: (1) draft appropriate forms for you; (2) explain all the various risks (e.g. legality of wholesaling, realty transfer taxes, compliance with consumer protection laws); and (3) guide you through the first deal without charging thousands of dollars.

They want the assurance of knowing they were really repaired.

She said the inspection office would view the project as a duplex, which isn't allowed; however, the zoning verification letter would override their decision and they would have to allow it. so I paid the $150 fee and got the letter stating that my plans would result in a multi family use, which is in compliance with the zoning.

So while it may (or may not) be true that ANYONE can succeed in real estate, I can assure you that EVERYONE can not.  

The main concern here is that such mod potentially may be viewed as "origination" with all the regulatory and compliance consequences that come with that.

I went and looked at one the other day and quickly figured out the property was priced too high for the risk for me, but I'm not as sure where to start with the numbers on a deal like this, which doesn't necessarily fit the typical formulas.

@Marcus Auerbach I'm going to verify with compliance what products might fit this scenario.

@Jay Hurst @Joshua Diaz @Robert Schumacher @Michael Tng I just ran into this yesterday and verified it with our compliance team...FHA-Rate Term-No Seasoning Requirement, FHA-Cash Out-12 Months, Conventional-Rate Term-No Seasoning Requirement, Conventional-Cash Out-6 Months.

They will run the vehicle tag/vin and issue an order of compliance and maybe even have it towed for you.