The seller has described the brother-in-law as both unstable and possibly confrontational.The seller lives across the country and says he can't evict the tenant from where he currently lives. 

I will say I am likely not the partner you have described, though I have a couple deals under my belt so I am not a complete novice.

Prices in this town could be described as "Detroit Like" (without the crime rate).

Wholesaling IS NOT what was described in the original post "...finding a house on Craig's list and putting a buyer together with the seller."

Bruce M, I found this on the web under a solo 401(k).In 1981, the IRS formally described the rules for 401k Plans.

If I did something like you described in the Seattle, WA area I would expect to pay 20-25K maybe more.

Look into the time frame in your state, since it is likely different.Or, you have a situation as Don described, where the foreclosure was flawed.

Here is an excerpt from @Clint Coons regarding the due-on-sale clausehttp://www.alglaw.com/service/view/land_trustsWith respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may NOT exercise its option pursuant to a due-on-sale clause upon:(1) the creation of a lien or other encumbrance subordinate to the lender's security instrument which does not relate to a transfer of rights of occupancy in the property;(2) the creation of a purchase money security interest for household appliances;(3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;(4) the granting of a leasehold interest of three years or less not containing an option to purchase;(5) a transfer to a relative resulting from the death of a borrower;(6) a transfer where the spouse or children of the borrower become an owner of the property;(7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property;(8) a transfer into an inter-vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or(9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.So, like K.

As far as I know, there is nothing illegal about what I am describing and I found nothing prohibiting it on the Square-Up website legal limitations.Of course, this may or may not be useful depending on your available credit and rate.

To have a good wholesale deal, you need to find a deal that is just as good as what I describe above for it to be attractive to your end buyer.