@Roger Poulin  You mentioned that doing this would potentially not trigger a due-on-sale clause, and I will seek legal advice from this, but I was under the impression that if I take equitable interest in a property then it could likely trigger it.  

In 99.9% of the cases the party making the offer will be asked to provide the documentary proof mentioned previously, and of course rejected should the seller not believe he will be able to complete the transaction.  

You can roll those funds over into a solo 401k, as mentioned by a poster above.

@Christie Duffy  Very much depends on the end product quality level.... as @Jim Adrian mentioned, $125 per SF has been a base number we've used for new construction though my experience is in the burbs, not urban Hoboken.

I feel the best to do that is by going the TK route which I know many are against but living in a HCOL area, its tough to just on the sideline and wait.

There are  many people there bidding on one thing but out of courtesy to the auctioneer and seller who's forum you are using, wait until they are done.

You mention the owner has paid $70k on the mortgage but that isn't a number that matters (since who knows what interest rate he's on or if he's made any extra payments), what matters is what the outstanding balance is on the mortgage and can you offer them a purchase price that is A) Fair to the owner, B) Helps them sell with some amount of equity and C) Gives you room that it financially makes sense.The numbers change based on if you want to flip it or rent it, making the question "does it make sense" different based on the direction you choose.In short, I have no idea how much I would offer...

Also the rent rolls/pro forma will help clarify, but you didn't mention anything on metering.

There must be a piece of the equation that I'm not getting.You mentioned that the owner bought the house for $105,000 - was that the price he paid for the property or is it the amount of the mortgage that you're referring to?

Finally some excavators from out of town said they would do it if needed but waiting for there bids on it.