There were other sellers that I felt weren't, I'll say "on top of it" or unique situations where I wanted more assurance of control.The contractor did about 60 or so homes (he finally got smarter, made enough money to do things on his own) and set up his own operation and branched out as well.Risks, if you don't know what you're doing you can lose, need to do the same assessments as if you bought the house, so there are those issues.The only risk associated with the owner is dying or being unable to continue, that's really only a holding cost or time matter as that can be managed.Never had an owner try to pull out, a few lost interest, but none backed out.

The Section 8 tenants have a lot to lose if they don't follow the terms of the rental agreement, so they are motivated to uphold their end.

To leave it with the property owner might cause some individual homeowners to lose their home but then an investor that can handle fixing the problem will be able to benefit and restore the home to functionality.

What do I have to lose?

I would have to say talk with a CPA on this for your specific circumstances.If you are purchasing all cash with no financing, IMO your biggest objective is to cover your butt since your the one with all the skin in the game therefore have everything to lose.

The seller could have to foreclose and if it goes bad lose way more than the 5% you put down.Eventually if you search long enough someone will want to dump a dog.

@Lou VeigaMost of the time tenants DO know, because the Sheriff posts the property with the notice of sale.The owner of this property with 40 LLC would seem to be a pretty sophisticated owner and it would seem unlikely that he would lose $100,000 in equity through foreclosure.

Good advice above...I'd recommend getting a couple contractors in to give you an idea of the cost of repairs (I agree with Joel that it's going to be more than $15K), and then renegotiate with the seller based on the costs and how much you're willing to invest.The worst thing that could happen is the seller says no...you don't have much to lose (other than some time) by getting a few contractors in and attempting to renegotiate.

We were able to do the repairs on our own schedule and did not lose the normal income for the property in the meantime.

You can't overpay for the place in case you need to get out from under it, but as long as you can sell at retail without losing money it isn't a bad deal at all.The 3 things you need to do it 1) see the place to see if it needs work, sounded like you will see it soon for this. 2) you need to nail down what the current value of the house is so you know if $85K is any discount, right on market or if it is upside down.