Looking for advice on first deal!

[Hailey Pliner]

I am looking to purchase my first rental property but need some advice on where to go from here! I have found a 3 unit with 2 of the units already rented out with 15+ year tenants with another unit that we would live in. Property is in great shape, no work needed. However, my credit is only fair and and FHA loan is not a option. ( 4+ year old closed credit cards that are being paid off).

We plan to sell our current home and use the proceeds to pay off the credit cards dragging our credit down and the lender we work with has verified doing so will raise our credit to where it needs to be. 

I have found a hard money lender that can lend us the money to purchase with a reasonable interest rate and balloon payment 8 months after but is it too risky to plan on the house appraising and getting a home equity loan to pay them back? 

The other option I thought of was finding someone to buy the home and rent it to us with a higher rate while we sell our house and pay off the negatives on our credit and buy it back from them at a higher price so the investor would be receiving rent and a higher price as compensation. 

Is there a better option out there and if so how do I go about executing this? Thanks in advance for your time!