@Brandon Penn I may have a couple lenders to introduce to you who primarily work with investors. 

If you google it up on fha’s website you’ll learn more than us responding piece meal.

Complete remodel of empty unit.

Obviously there is a lot of factors left out of this (will bank approve, you name another etc) but just from a theoretical standpoint is what I proposed (using tenants $300K down payment as a down payment for my traditional loan) illegal or just not feasible and I've completely missed something here that more experienced people can explain to me when they are done having their chuckle.  

She has a lender lined up to give her a conventional loan, but she needs 5 months to complete their requirements to qualify.Since she is about to loose all the equity she has put into the property, she has offered me the following terms: I'll pay off her land contract, she'll make monthly payments to me of $1,200, and then in 5 months she'll refinance out and pay me out a lump sum of $160,000, for a profit of $20,000.

There is not much I can explain in a post, but $20,000 in one is completely different in the other. 

My payments are either after the work is completed or at a draw rate that is in my favor.  

Are these expenses recoverable in the event of redemption before completion of rehab?

I’m primarily interested in buy and hold properties using the BRRRR strategy but open to a fix & flip if I can find the right deal close to me.I’m looking forward to connecting with other like-minded people on here and hopefully in my area.Thanks!

They're safer in my view, completely passive, and will perform better over the next 5 years.