I'm looking to borrow $50k for the down payment and plan on financing the rest with my local bank.

You can also go the community bank route a look for a portfolio loan, which will give you flexibility to expand/borrow on more properties.

Your family member could also provide the financing on it and make money every month with a positive cash flow spread between the debt and the rent collected or be like a guarantee person that is the main backer for the long term loan your Bank or other lender that  owns that property with a long term loan with that property  on a security  loan until that loan is paid off.Not saying the fix up budget makes this decision fairly difficult but i would say to not have a house that needs over $5,000 on the "make ready" expense to make a 20% gross return giving a cost price and sales price you gave on your example.What you could do to find a deal is pretty limitless. 

With all the great commercial loan programs out there, if it were me, I'd search different banks for a Stated Income ALT program up to 90% cLTV with rates in the 4 to 5 range Questions:Are you paying cash?

ask for last 3 years bank statements, signed estoppel statements, and/or a signed purchase agreement that explicitly indicates the gross and/or net income of the park is true and accurate. 

Smaller, community banks are where you want to start.

For clarity sake, the previously mentioned "cash" term refers to liquid cash (cash in my bank account) not cash-out refi. 

What would be an option for financing.would the banks be willing to lend.what would you do in the situation.

In her book she said if a investor put a deed in a land trust to cover up the due on sale clause, this action could be consider a mortgage fraud; because if a court rules that the intent was to keep the bank from exercising its legitimate rights by hiding an important fact (deed transfer), I can be accuse of mortgage fraud.

You have an asset that in 5yrs time will be worth more (in theory) and you can always go to the bank to lend against.Plenty of wealth in Chicago so if you buy right you should it should set you up for good appreciation growth.