@Krista Walker you cannot qualify for a conventional mortgage (i.e. the kind of mortgages people typically use to buy their primary home) if the property is owned by a corporate entity such as an LLC, rather than owned personally.  

They are trying to get the highest price possible, so the buyers are traditional people looking for a home, and they are needing to get an FHA or Conventional loan.  

Once the property is seasoned, I would say he should be able to find conventional financing (might not be fully amortized 30 year financing), but should be able to.No construction is easy, but best route would probably be to get to permit and then get the loan. 

How pampered are we in Seattle with our a giant pool of quality renters and low rental inventory, that we have to worry about these things.  

I tried to refi a flip I did recently and conventional financing said they would refi me 70% off the purchase price and rehab costs (rehab had to be an invoice from a contractor). 

They "are going to write an offer" with a financing contingency for getting approved for a conventional loan on the place.

Assuming that you can get conventional financing at 5% you will still need $150,000 for down payment.

I am confident no conventional loan would work like this.  

@Richard Fields - I think the financing options would be the same as any investment property.  20% down if it is 1 unit, 25% down if it is 2-4 units and a conventional loan

I have also connected with some folks on the residential side, so far I have not seen great cap rates and the inventory is low.