@Jacob Elbe "So if you and the seller come to an agreed price it doesn't matter what market value is.sorry I couldn't be more help"In a situation where unrelated parties are involved, you would be correct, FMV might not be the primary factor.  

I normally figure 5% or $4,500,,,part of the cost are the same for most houses (appraisal, many of the fees etc), some will vary a little bit (title insurance).I buy houses in just under $100k, and it seems like it normally ends up at just under 5%,,obviously this does not include any tax cost or credits that may be involved.

In that case the odds of the seller dropping to a price you are willing to accept is low and you eat the due diligence costs.

The tax planning strategy that some of the posts have eluded to used to involve getting the renters out of the property, moving into the property and converting it to your primary residence, and then selling it after a two (2) year period in which you have held the property and lived in the property as your primary residence so that you can exclude up to $250,000 in capital gains if you are single or $500,000 in capital gains if you are married (depreciation recapture would be taxable under this strategy).

So here is my plan I have some investors but plan on getting more involved but how would I pay my investors back monthly or annually?

No management company involved at this point.Homes like mine are renting for around $1100 to $1200 so after a year when this prospect tenant moves out I will market the property for $1200 so the cash flow then, including a management company, will be $500.

In every Syndicated deal I have been involved in, the lender requires the equity partners to be vetted, and be a signer on the loan, if their overall ownership is above 20-25%.1.

I am over in Huntington by Prime in Halesite and am looking to get involved in my local market.  

Then if you got the zoning change approved you will have to make 2 functional units which at a minimum will involve walling off separate sides, adding at least one exterior access point, and a new kitchen in one of them.

I fixed somebody's screw up like that before and believe me it is a huge pain and involves a lot of cost.