After assessing the cost of remodeling, and either renting or selling the property weighed against the advantages of selling as is to a builder it seems to make more sense to sell it as is. 

Its just a cost of doing business . 

Ask about replacement cost versus Actual Cost Value.

Therefore, it's vital to calculate these costs before purchasing the property.Seeking the help of a 🏗️construction professional is recommended to create a comprehensive budget that includes hard costs (materials, labor), soft costs (architectural and engineering fees), and contingencies for unexpected expenses.

The seller is willing to finance 50% of the cost and defer payments for 5 years.

I would get out of that note as soon as possible to avoid any further charges, 10% in extension cost is the most I've seen recently.

Does cost seg study offset any w2 income or passive income only?

Just another cost that a lender has to consider on a PERFORMING asset.

The cost of entry is low, and cash flow is high.

I’d be happy to get you an estimate.