Besides what @Dev Horn said which is great, having confidence through what you learned over the phone or in person will only make the seller feel more comfortable.

RE investing doesn't have to be scary if you are confident in the people around you and the information you are getting.

I am not opposed to making some needed improvements, but don't want to take on a major rehab now. 

So that 100k would include the 55k for the improvements?

he told me that Washington is a private land(hard to buy) or something like that but it seems that my affordable price range of a house is 40k :( sounds to bad to begging with. so ill need my wife's credit score even that she do not work to improve that issue and also He needs her SSN(true?)

IMO the situation could be improved a lot by 1) advertising that the unit is in an owner occupied building and 2) not having your sister initially show the unit.  

A home can sit and sit and sit and sit, until the seller either make more improvements which they usually never ever do or drop the price.

Theoretically, over time, the buyer's credit improves and, when they can get a mortgage, you get paid the balance.  

You are elephant hunting with a BB gun, you need to get out of the jungle and learn real estate.Your questions are so vague they can't be answered without writing several books.Land is always valued with the market approach unless it yields income without improvements, then the income approach may also be considered. :)

I am really hoping they either pay the rent or move, but I am not confident that will happen.