Renovating a 100+ yr old "historic" house is one of the most challenging and difficult tasks...for anyone; I can't imagine taking this on as a "super green", "newbie".  

Nothing against it necessarily, but if you have the cash for down payment, and reserve requirements, the income to satisfy DTI requirements, and the property in question is a good rental property, then there are great options for conventional mortgages, and with rates being where they are right now, I would want to take advantage of conventional financing before getting "creative"

That will be your biggest challenge as an investor. 

A challenge with this loans is you're often sandwiched between a balloon and a pre-payment penalty. 

He is unlikely to challenge you in court because that would be admitting to something illegal.

The downside is you will need to live there, for a minimum of one year (to satisfy FHA Requirements); AND because you closed personally, you will not have Asset Protection, in the form of closing in the name of a LLC.

(And would this be more challenging for the courts?) 

Been in this rollercoaster ride for about 11yrs, Love the challenge from negotiating with lenders (shortsales) To dealing with multiple sellers with different mindsets. 

If you are looking to buy something off of the local MLS - you might find that is going to be a challenge.  

The bigger challenge is likely to be financing, fnma, freddie, HUD aren't going to touch that - giant marketability issues.