Texas does have specific rules regarding home equity loans and cash-out refinancing (often referred to as "Texas Equity Section 50(a)(6)"), but these don’t prohibit homeowners from using funds for investment properties.

Give me a shout if you'd like a rate quote for your DSCR loan.

If it is with HUD, did they foreclose or is HUD servicing the loan? 

Even after one year, that property may provide thousands of dollars worth of appreciation, you will pay down your loan and build some equity, and you can depreciate the asset. 

The Norris Group has a hard money ADU loan, but it's short term (3 years). 

The sale failed and he still owns it.One of the potential solutions is to use an SBA 504 loan for the real estate. 

Once the rehab was done I refinanced out of the private loan into a conventional loan as a primary residence.

We were able to get into it with a 5% down primary residence loan.

If you are going to be an owner-occupant, want a low down payment, and are planning to do a renovation, the FHA 203k and Fannie May Homestyle loans are your best optionsHow do you know the property is currently upside down on the mortgage? 

The only way to pay down a loan, is to pay down a loan.