Your plan is very risky. 

I might mention that power must run that well and, unless buried, power lines must run over someone's property to reach the wellhead and pump.Unless you own the RM and obtain title to property as successful high bidder from foreclosure (risky in this case) you're probably better off getting capacity, powers and authority by opening probate to legally control title and possession.So, the opportunities are centered around control of title, possession AND reduction of secured debt. 

That's very risky.  

Maybe you can make her a less risky offer as a lender if you are confident that your numbers are correct. 

I only have 5 properties and have a company taking care of them (specially because I live in NYC and the properties are in TX).Regarding being a hard money lender, I  never thought about it, isn't that super risky?

Even a summer home will raise the rates so be careful on how long you wait to refi because the rules may change and the savings now my not reflect the way the bank looks at your property Rental (risky), single family home primary residence (not as risky)

The negative doesn't have to be very big before it is very risky, to be kind.Say you have a $100K house that they owe $110K on.  

Being a family with 2 babies, it would be too risky in my opinion.If you take the step to purchase your own home, be aware of all of the costs of home ownership.  

We would therefore be acting as hard money lenders and his proposition is to split the net profit 50/50.

That last scenario is a little risky.