There may be a legal opportunity here (the big one being what Steve Vaughan described), but keep in mind the holding cost clock is ticking.  

Like my grandmother use to say  wow no words to describe this podcast Congratulations guys 

After all, in theory they're trying to maximize profits just like you and from what you're describing this isn't a good move for him. 

This is a good rule of thumb but some properties may be unusually expensive / inexpensive to maintain, manage, insure, and pay property taxes.Personally I'm not terribly impressed with it as described but there's a lot of other factors to consider here.Tim

They are a different animal from the renter you are describing. 

As to a partnership, the money is taken into the business entity and used as a capital contribution, the split or loan arrangement is described in the partnership agreement and accounting records to control funds, a note may be used but may not be necessary.

So armed with info that this guy is hiding something, the house is probably in worse condition than he is describing, his # is just ridiculous regardless and seeing other 'as is' homes that have sold I think I have enough to say it's time to walk away and use my resources elsewhere.

I think it is basically as you describe with variance for everyone's personal criteria and perception.  

Even as someone who spends all day, every day thinking about BiggerPockets and constantly striving to make the community bigger and better, I still have a TON of trouble quickly explaining who and what we are to friends, family, and strangers.BiggerPockets is so huge and has so much to offer to Real Estate Investors that it sometimes seems impossible to meaningfully describe our platform to an outsider within 30 seconds or so.  

What you are describing seems like, 1 part realtor,  1 part home inspector (for flips/remodles), and 1 part GC.