With an arms length transaction you can use the purchase price as the assessed value for 2 to 4 years based upon which county the property is located in.

Where you save in cost is the length of construction time. 

(i.e. interest rate, up-front points, length of loan, extension time and cost, etc?)

I attribute my long length of experience at giving me a good foundation to work from when I wanted to buy and hold, since I generally buy wrecks and turn them into something nice. 

This way it's an 'arms length' transaction and all of your profits will be sheltered from taxes (or tax free if you are using Roth 401k). 

In order to be determined bona fide the Lease must be created under an arms length transaction, and cannot not be entered between the foreclosed borrower and his or her child, spouse, or parent.  

Honestly save your self the trouble and partner with someone that is on your same wave length.

They are essentially looking to cash out all the equity above what they owe and are willing to carry a contract (length TBD)Total asking price is $750,382.33 and they're willing to negotiateTotal FMV (best I can assume [Zillow, Trulia etc]without being there) $900kAll properties are rented out to long term tenantsMy intent right now is to get all 10 properties under contract, providing the sellers with an option fee for each house, and upon return to the Americas this fall. sell or rehab and sell 2-3 in order to provide enough down payment to finance the rest (if I can get a commercial loan for all 10).

Thanks @Brian Gibbons and @Bill GulleyMy idea was to purchase "subject to" at market rate of around 63k with the understanding that the loan was underwater and at the sellers current 5% (or if possible 6% to provide the seller some cash flow).Then do a sandwhich deal and resale the home through another wrap around mortgage to the end-buyer for about 8% on a 15 year loan.This would bring the end buyers payments to about $600/month, almost $300 more than the sellers amount due monthly on the loan.If $200 of the $300 monthly from the end-buyer were applied on top of the original sellers loan (70k, 5%, 40 yrs), it would pay off the loan in 15 years while leaving $100 cash flow for the length of the loan or 18k to the investor over 15 years.I left out the down payment because I figure since the loan is upside down it would need to go to the sellers loan amount and would only shorten the loan term for all parties but would also create obligation for the end-buyer.This essentially allows the original home owner to obtain his full loan amount through the interest earnings over the life of the wrapped loan.I see a risk at play if the end-buyer refinances or pays the loan in full prior to end of the loan which would leave the investor (me) responsible for the difference of the sale price and the original sellers loan balance.

Since buying down an interest rate is a guaranteed (zero risk) investment - unless I were to sell the property - my opportunity cost of capital is very low, say 2-3%.So I chose to pay 1.29 points for the 3.25% rate because the 23% rate of return exceeds my opportunity cost of capital and is higher than the 18% return offered by the 3.0% rate option.It should be noted that if I assume I might own the property for a shorter length of time or refinance in the near future, that would change the decision making process and introduce additional variables into the decision.What say you, fellow BP members?