We don't ever build/renovate for other people as someone else is making/changing decisions and all kinds of things go awry. 

First is assurance that I'm making wise decisions / deals.

First is assurance that I'm making wise decisions / deals.

Then, I'd make a decision from there as to how to handle the situation further.

Several of you commented and it really helped us solidify our decision, so thanks to all who commented!

Other then owner financing, talk to a loan officer so you have the facts to make an informed decision.

It sucked to watch, and I would hope this is a one-off experience but . . . .well, you know how things go.So, do your due diligence with the COA in addition to other aspects and make the best decision you can overall. :) 

Since you don't own the property you cannot make any major repairs or improvements to the property without the owner's consent because if you make repairs and don't pay the contractor(s) then the contractors will file a Mechanics Lien against the property and the owner will be liable to pay the contractors.If you do repairs to the property and you don't own the property the owner can sue you for destroying the property.Should the seller decide he (or she) no longer wants to sell the property because he either wants to keep it, or he can sell it for cash on the market then he will sue you in court for whatever his attorney can come up with and you can get sued just because the contract the seller wrote has some b.s. that makes in not valid.It doesn't matter whether you are right or wrong when  you get sued because when you receive a Sheriff serves you with a lawsuit you now have to make some serious and hard decisions in regards to whether or not you want to pay an attorney $50,000 to $100,000 to settle the lawsuit that often takes up to 5 years to settle in court.How do I know all this?

We made the decision to get an LLC then and now we are more protected.

  $80k sounds pretty high to me even to tear-down-rebuild, which is probably an excessive approach just to make parts align right.The dividing line between owner-occupiers and investors in buying and selling decisions is the investor approach is the numbers.