Key is to minimize them.

I'm looking for a way to help him keep a beautiful home with minimal risk to either of us, but hopefully also make a small return in the process.TLDR version: $1M property value, approx 15-20% equity.

Big box retailers & Well rated companies can still go under, credit ratings can change, areas can change, and sites can even go dark.  

Expenses are minimal (Maybe $3-5k for the year is our estimate).

So we have a tenant that we inherited who is paying minimal below market rent for almost 3000 sq.ft.

t's not an ethics thing, liens on houses don't happen in the dark and hard money lenders typically won't put a loan on a property that has a loan on it or allow a loan to come in in 2nd position.

We are seeing the average 3 bed 2 bath with minimal rehab running in the 150K-200K range and property taxes are currently low, creating a good opportunity here to prop up the rental market which is slowly running out of supply to the increased demand. 

A couple of things you could try to help minimize your risk.1.Doing a virtual walk through with the realtor asking questions and taking notes on problem areas.2.Have a virtual meeting where the realtor introduces you to the contractor or even multiple contractors to discuss the problem areas and solutions.

Fannie and Freddie are in the low 5's if not high 4's on a 30 year with 0 points and minimal processing/underwriting/closing fees.Like I said, if you qualify, go for the conventional financing. 

One requires minimal work and the other is going to be a massive project.