Millions of homeowners would then be underwater on their mortgage - owing more than it is worth - and would likely foreclose / declare bankruptcy, creating a credit crisis, unemployment would spike to 10%+ and on and on… No, no the price of homes, and really everything we pay for, is here to stay.

I also see that some have additional reader fees that come with it. yikes! 

The goal was to initially do a small renovation and add an additional room and bathroom to the already existing older home. 

If you want to protect your friend's capital as if it were your own, you'd want to:1) Secure the loan with real estate in the form of a deed of trust or mortgage (depending on the state the property is in)2) Obtain property insurance binder with your lender as an additional insured3) Obtain a lender's title insurance policy protecting them (different than an owner's policy) and transfer all funds through an escrow closer or real estate attorney (depending on the state, the requirements for closing may differ)4) Use a real estate attorney who also practices private lender law in the state the property is located in.

Additionally, with a median home price below the national average, Cleveland offers affordability that may be attractive to some investors.

Max LTV should be 75%LTV based on the basic factors, credit & DSCR. 

I do wonder if I leads to more inventory though, I have for instance another client that this 2.5% might be the difference in deciding to list or not, for sellers without a lot of equity that 2.5% can be the difference between writing and check or not, which in addition to some people not having the money to cut a check is also a huge psychological barrier, there are probably even some people on the margins who have in thier head they will only sell if they can net 100k in profit or some random number like that.

I do my due diligence on Kevin (and his girlfriend) and he has zero evictions, zero criminal history, great credit score, referrals etc... ticks all the boxes. 

The owner has done some questionable work with the kicker being an un-permitted unfinished addition that would either add 150 sqft or cost to remove/rebuild, still not sure how I want to approach this. 

In addition to what Michael said-if you do go ahead with purchasing it, write in the offer that they can not rent out the vacant half, deposit from the occupied side is transferred to you at closing along with prorated rent and get a copy of the lease that has been verified.