5 unit multi-family- Should I use line of credit?

[Rhonda Burke]

I am currently under contract for a 5 unit multi-family. It's in a small mid-western town near Cincinnati where rents are good and increasing due to housing shortage. The small town also has a weekend/seasonal draw for out-door recreation and historical small tourist events, so there is some potential for use as an AirBnB. The building is solid but has 40 years of deferred maintenance and updates needed. The building owner recently passed away and the 90 year old relative just wants to sell rather than invest any money or mess with tenants. There are two tenants currently and rents are low for fair market. 3 units are vacant. All need updated to attract decent tenants- most recently used for junk storage for the owner.

*I am working with a small local bank, however struggling to get the purchase of the house and funds to fix it up approved due to debt to income. They won't use the potential rental income because there are no leases with the two tenants and 3 units are vacant.

* I have spoken to three hard money/DSCR lenders, however my total project is too small for their commercial lending guidelines. (Under contract for $45k for purchase with repair budget of $60k-75k to upgrade electric, paint, kitchens, baths, flooring.)

* I am able to use a line of credit on my house to buy the building out right, but would not have enough for the repairs. 

* I did approach the seller to to see if they would finance the deal, but was turned down.

1. Should I just buy it and figure out the repairs to slowly get each unit upgraded over the next 1-2 years? The current rents are at $500 each for the two occupied units. The fair market value should be closer to $700 for the 1bd and $950 for the 2bd once remodeled, however. The current $1k/mo will cover the expenses for now.

2. Will it be easier or harder to get a mortgage, line of credit, or rehab loan if I already own the building by purchasing this way? 

3. What am I missing? or What else should I consider?