I know that a lot of the expenses are nonsense, but I know have to convince the bank to underwrite based on my reworked financials rather than the financials provided by the seller, which is not easy.

Our current cost estimates include a rework of everything from the ceiling up (10-15K)...  

But as you know so many people are clueless about how RE works and litigation they will just follow an attorney blindly. instead of working out the situation ...

Anything can be a potential deal, if the price is right.The price you negotiated is based on certain scenario: That you can evict the guy within a certain timeframe and that the house isn't destroyed and that it only needs a certain amount of work.You may also have to worry that the previous foreclose may have flaws in it and that a judge could unwind it and say that he still has equity in the property.So, what you can do is rework your offer and offer her a couple things:1.

I’ve spent many years working with the top banks & CUs in the country to implement origination software and re-work the board lending policy into an automated underwriting engine.

@Roy N.Thanks Roy, good info, I'm going to rework the numbers with higher interest rates and higher purchase prices to cover every situation. 

Rework and help.

If you tap the equity on your rental, then you have to rework these numbers as the mortgage payment will be increased. 

Why not simply have the seller rework the tenants lease wherein the tenant that wants out moves prior to close?

Rework your numbers and see if you BRRR the property