It could work out fine in some markets I would guess and my assumption is that guy #1 would spend some money on repairs but probably not a lot.

By doing the 203k reno and refi you are making the assumption that you will be able to refinance under terms that are still favorable and that the home value has increased significantly enough to make it worth refinancing.

By my calculations with some rough estimates (and general assumptions without knowing your situation/credit score/etc)... 

I make no assumption on how the seller got to a nice ROI and the buyer's financials eg all cash or w/mortgage, as ROI is ROI.Personally, I'm all MFUs for the economy of scale, increase GSI with similar expenses AND I can force appreciation by increasing rents - - but that's another subject all together.

It makes sure people don't make assumptions or misremember the deal you had.

I'm putting 7/8 of the money and all the work yet his logic was I couldn't do the deal without that down payment, wrong assumption. 

Would that mean that Darwin's assumptions would have the most fit stay in their current markets and find new ways to adapt?

Try a lease option with right of possession and cash when option is exercisedTry a 100% owner financing deal with a percent of the profitOffer to make repairs as the down payment subject to a first mortgageOffer a trade of one of your  properties subject to the saleTry a 1031 tax deferred exchangeOffer a created note secured by another property for an even trade or as down paymentAsk for the deed so that you can get a 80% mortgage - seller retains 20% ownership or a mortgage secured by a personal note (not recorded)Ask the owner to refinance subject to a onetime assumption by you - he keeps the cash, you get the deed and make payments on his mortgageJust a few ideas -We investors should always look to creative financing methods and should always make offers - regardless of what the seller wants - PUT IT IN WRITING!

For simplicity let's just take out the real estate fees only which often times get discounted at that price level so let's say 5% = $77,450 and then split $97,550 with your partners and it seems like an awful lot to go through for 45-50K not to mention VERY little margin for error.Of course I'm making some assumptions 1. that you paid a Realtor(s) commission (which I'd think you'd have to assume your going to at the beginning 2. that you have partners (which is often the case).Can anyone help see something I'm missing?

I was under the assumption that you don't need to be an agent or broker to do a lease option deal.