@Dan L.There are a couple of options here including:Cash out Refinance - this should be able to get you somewhere in the 60-85% of the value of the home.Get a HELOC - you can also tap some of the equity by getting a HELOC loan and using it as a down payment for additional properties. 

We just told them we would add it to the inspection list and not to worry about it.

Then, once you've shown that you can meet or exceed return projections to family and friends, you can attract additional capital from passive investors.Regardless, real estate is a long-term game, so any strategy you use will likely take years to get off the ground.

Additionally, anything I've ever had that hits even close to 2% has been pretty hood-ey. 

I am trying to avoid an FHA (203K) because I do not want to get stuck tacking on thousands of additional dollars (that I will be paying PMI on) to pay a professional to paint the inside and outside of the house to meet the "no peeling paint" requirements in order to close on loan.

I'd rather bet on myself and live with the consequence than throw money out of state and lose most if not all control. 

A single family home 4 bedrooms & 3 bathrooms 2,140 sq ft, unfinished basement, 2 car garage, pole barn with additional 2 car garage & 8 dog kennel, updated appliances, roof in great shape, well septic & 2 acres.

Additionally, his equity split is Investor Equity (80.0%)Sponsor Equity (20.0%), is this also typical? 

Thus, if you ask your employer to withhold additional amounts for the rest of the year, the penalty can be retroactively eliminated.

Get your lawyer to adjust the terms to include additional partners.Never operate any partnership without a legal binding contract.