@Ahmed MoustafaThe general Fannie Mae guidelines you mentioned are for non-renovation loans. 

Oh and someone mentioned that you should make sure you are allowed to rent both units out.

While it's not as passive as working with companies like I mentioned earlier it's still a great option.

@Katharina BormannHi Katharina, you need to put something in writing to the tenant with a reference to the lease clause to officiate the lease violation, as @Nathan Gesner mentioned.

Quote from @Shaheen Ahmed: Quote from @Travis Biziorek: Wow, nobody mentioned Detroit yet?! 

Start-up expenses like the ones you mentioned can’t be fully deducted in the year they’re incurred.

I know some mentioned about developing banking relationships and I totally agree with that, so here is what you do. 1) Open a business checking account in the name of your LLC to hold the assets. 2) Deposit your cash into that account to fund the real estate purchases3) After owning for 60-90 days, talk with a local lender about a line of credit against the 2 properties at 60% LTV. 4) After about 30-45 days, have the line open to use if you need that liquidity that you used, but until then you are not paying 7% interest on nothing. 

Pursuing a SFR in the fashion I mentioned above would be more amicable, but this depends on your ability to enter.   

I probably wouldn’t mention your third point - it makes it sound like you expect them to hold this note forever and I’m not very certain, but I’m guessing there isn’t a huge market for $100k secondary notes.Have you considered asking them to finance 90-100% for a short period of time so you can rehab and refi at a higher valuation?

Because of the time value of money I would rather have the cash flow today to reinvest in other projects.You mention that that seems to rely on appreciation- I think it is the opposite, by pushing out the term I am focused on cash flow.