Save it up for when you sell. 

I proposed fixing it up and then selling it on the market and the family agreed.

After that, I'd refinance and either rent it out or sell/1031 to get into my next property after that that will hopefully cashflow, or I'd rinse and repeat since I have one small rehab under my belt at that point. 

So he's going to sell the 2 acre lot which would net hopefully about $160-170 after fees.Firstly, do we have to make the current one an ADU? 

A 13 is what will cancel a foreclosure IF the borrower completes it, which takes 3-5 years or, court approval for shorter period.I agree most end up not going to foreclosure sale but, my experience is they don't' because they sell before sale or otherwise reinstate.

If I put 20-25k into this house and sell it for 525 I would walk with around 170k pre tax. 

just selling a product (that I had no interest in).Any help is greatly appreciated!

You can not likely leverage that with debt, however you can sell a percentage of the Option for cash and use that as a down payment if you need too.Have You suggested taking over the sellers new cash out refinance loan subject to at some point? 

You also really need to be a with a good real estate agent who knows these objections you are trying to fulfill upfront, and not just an agent who wants to sell you a property.

Did you acquire residential or other investment property in Santa Cruz County prior to July 1st, 2023, and are now contemplating selling it?