These questions are only part of a list I would want to know the answers to---- prior to putting my money out.YOU could end up owning the house, so you need to protect yourself on all levels.ALL rehab projects are different, some very complicated and some easy.

Is it really that complicated?

There are SO many complications regarding LTV, 2nds, Leins, clear title etc, past taxes, more...more...more... and unless you are a seasoned short sale professional wait until the property comes on the market as an REO listing.

It is very complicated and I have lost money on more than a few occasions.

Too complicated to fund and secure the investment with co-beneficiaries....You could have an LLC buy it and then have hime buy you out of your membership in a buy-sell agreement with him leaving the company as an event of withdrawl in the event he fails to pay as agreed, lots of brain damage there for this property, IMO, but an option as well.Either buy it and sell on an installment arrangement with a quick-claim or special warranty deed in escrow, with a collateral agreement for the acceptance of the deed, more brain damage, orBetter, loan the money and take a deed of trust, as Don and Ann suggested, easier, cleaner and do not take an ownership interest in the property as a lender.

Or is it better to use a buyer's agent since the contract and negotiations may be more complicated than in an REO transaction?

*All this is greatly complicated if it will need to be a short sale.

I would suggest avoiding such complications and going with the 2 lots as Bill referenced.

ThanksAmy Arata, some times we complicate thing unnecessarily.

Foreign income can really complicate your US income tax returns.