I wasn’t trying to be long winded, with too much detail, in my initial post but I actually did this method on a fix and flip.

Would it be wise to buy the land with cash we have or utilize as down payment to avoid PMI?

They are short term loans, usually 6-12 months, high rate, interest only payments. 

I am of the opinion that you'd be better served using that money toward the down payment on a property.

My guess solely looking at your numbers is that it's an older/distressed property which means you have to account for more costs in capex. 2nd thought being it's not in the best of neighborhood then you'd have to take into consideration lower quality tenants/ neighbors and maybe increase expected vacancy and late payments.

But why would that make them want to use this financing method?

Based on the CU's loan calculator, we can finance that over 60 months for a $320 payment. 

Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice.

Several have mentioned utilizing low down payment second home loans for qualifying.

It might be payment notices are going to a different address and it is simply overlooked.