You'll need to be more equipped, you won't be able to handle a capex and tenant issue in the first 12-15 months. 

It was a large flip project (original budget was $110k renovation costs) that went way over the planned rehab time as I had many issues with the GC I used.

@Michael Willis, Hey Mike,  I just did a quick scan of some old posts and as of a year ago the company was issuing K-1s which indicates that there is an entity that owns the land/project and the investors have an interest in the entity. 

So this is why this strategy is coming up so much one because of why you want to do it taking over low interest loans and when markets start to have issues and owners have financial issues.the KEY is finding sub too ANY EQUITY a lot of folks doing sub too will over pay just to land the mortgage to me thats not a good bizz model every deal we did could be flipped day one for a nice profit. other wise we passed. 

The code enforcement officer said he mentioned these issues to the sellers and the sellers' agent.

So legally, you can say 'no' to many of the issues that are brought up during an inspection.

Does anyone see any issues with doing it this way?

Overall, he did a good job, but there are issues that will show up on an inspection that aren't necessarily liabilities.  

The issue you are going to run into if your lender hasn't told you already having the 3.5% is only part of the equation.  

Technical professional working full-time ready to return to real estate investing.