If the landlord's already owed $500 from the security (say 2 months into a 12 month lease), that may not leave much more security to cover all future damages/unpaid rent/cleaning fees/etc. at move-out.

We have very tenant friendly laws in Portland and would have to pay a "relocation fee" to the tenant if we were moving them out so we could move in.

Since all of our properties are buy and hold rentals, we take the fair market rent lost as well as the estimated cost of utilities for the month and break it into a daily penalty fee.

Your purchase price with only $80k of repairs and assuming no other costs like closing or money lending fees could be up to $145k to have to be at the $225k all in price.

You Could, but with an REO you’ll need a legit POF or preapproval, you won’t be able to assign it, and you likely won’t find a flipper willing to pay that price, let alone with any fee on top of it.

@Ben Miculob If you've got an honest seller, you can take a boilerplate contract for your area and have a real estate attorney look over it for a small fee.

I have done this  in the past but also require a lease break fee in addition to them being responsible for all rent until their lease expires.

I am looking options on who can finance with a construction loan, as well as any advice on how to project soft costs, hard costs, and other miscellaneous fees. 

Architecture fees alone are going to $30k+ on a $600k building.

It doesn’t really matter....she will get the surplus above the $375k.....if someone buys it at the auction for $900k, is the same thing as her selling it herself, and maybe with less fees.