This includes schools, neighborhood feel, whether the houses in the neighborhood are well maintained and whether the specific house is one she would want to raise kids in. 

For pre screening are you simply looking at income, debts, employment etc? 

The key downside to this repayment schedule is that the borrower is paying interest every month, based on the entire loan amount (including the amount being held in reserve for rehab draws), even if no draws have been taken yet.

There are safe financing choices for real estate ventures, including seller financing, hard money loans, private loans, government-backed loans, crowdfunding platforms, and traditional mortgages.

However, it may lead to higher monthly payments and increased debt.

"Good Cash Flow" includes multiple elements.

He's offered it to me on a lease-option agreement, with a "purchase price" of $1.2M, "down payment" of $200k and 5% interest only payments on the $1M debt.

Then create the lease and include copy of the unit condition move in inspection (completed by you and signed).

The asking price is $150,000, which includes a very old house.

Therefore I need to be at $150/SF all in including land.