This appears to be an excellent candidate for a Master Lease/Option.
However, the bank will want to know the performance history for the last couple of years, to get the best rates and terms. It’s difficult to show a reliable history in one year’s time.
You would want a 24-month MLO, with a six month extension option. This way you’ve got time to reposition/stabilize the units, and then more time to demonstrate a solid performance history to qualify for the better financing rates and terms.
Nonetheless, the last 90-days of occupancy are critical to verify in order to qualify for the best financing terms. You want to show at least a 90% occupancy for the last 3 months, and preferably a higher occupancy rate to really settle the issue.
You could take title to the property “as-is” with the promise of refinancing the property as soon as the management is straightened out. If you can increase the value of the project enough with better numbers, you might be able to refinance the entire balance owed to the seller (or sell the project as you mentioned) in a couple of years.
Most of the time, sellers will participate in the financing (to get their price) by holding a 10-30% second. I think you should build seller financing into the “final” financing, just in case you can’t refinance the whole balance. or sell it for the price you think you can get. The better terms you can offer, the better price you should be able to get.
You could even give the seller the down payment you have now, or put that money into an escrow account to be tapped as agreed to make repairs, upgrades, or whatever, as the building is improved/stabilized, etc. This way, you’re not putting up two down payments; one to buy the building and another to fix it. Just some thoughts.
This does mean that you’re likely going to be burying money (of your own) in this property for a while, since, again, seller financing is common and many times necessary in order to entice a buyer to pay your price… Just saying.