They just blew out a mountain of debt and will not get a bunch of credit extended to them for awhile.

Keep it simple, you only need one out clause.Maybe these are some of the questions you want to ask your lawyer to build into your offer:An agreement that you can use to flip, joint venture or hybrid propertiesTerms and process to collect your assignment fees A nothing down clause, check funds clause with non-negotiated fundsWith a build in extensionOne that allows you to control the property for an extended period of timeWith full profit disclosuresWith one easy to understand out clauseWith right to assign, right to market, right of possessionAsk your lawyer to write an offer based on those terms and you'll have a written work of art.

Its good that you may have strong idea and strategy to refinance, but its important for you to assume that play won't be available when calculating your affordability of a home.If you can't see yourself purchasing a home with PMI for extended time, then it means you could be over stretching yourself.Remember, for a refinance to work is your assuming you'll get the cash in the future (seasoned) to put in 20% down.  

I have extended family that would rent out the main floor of the house.

I typically give the tenant buyer a two year option and sometimes the option to extend their option for a $1,000. 

So of course he goes into contract on a place yielding 46.97% (He has a self-employed fiance and another $2k/month, neither of which I can count as qualifying income, so I don't feel like he's over-extending himself).

OK, BP-Landia, to pass the time waiting to hear back from my lawyers, allow me to share the following tale, edited here for brevity (believe it or not):Duplex in Houston TX, listed at $X68k; after extended negotiations, which purportedly included a new tenant on a year lease at $1400/month and promised repairs, went under contract for $X56.5k w 3d party financing.

We have a good lawyer friend of his acting for us..One of the ideas we had was to go back to the seller and ask if we can submit another contract on the back end of this one, so we have it tied up for a longer period, but that comes down to the seller and hes already extended it once for us..Any help or advice would be greatly appreciated!!

Leverage can work against you risk wise if you over extend, which is why staying cash flow positive is key. 

The fiduciary duty morphs and becomes extended so long as that money is sitting in escrow.