Typically they'll look for additional reserve funds in your name to make sure you can still complete the project in case it goes over budget.

Consider the down payment, closing fees, remodeling budget, and financial reserves while saving for a house worth $100-150k.

This can be a bit of a pickle, especially if you’re tight on cash reserves and both units aren't rented for a period.If you’re considering cash for keys, there are various ways to approach it, depending on how open the tenants are to the idea.

I understand your concerns but you still have to have the funds to put the down payment down and have 3-6 months of reserves unless you are experienced.

Not having enough reserves is hurting a lot of operators right now.You can always implement Ratio Billing for the utilities and bill back.Be careful with unit sizes, and if there is central air or PTAC systems when getting market rental comps.Looks like you've got an opportunityGino

@Ben StanleyI would assume you get zero revenue from anyone else and be able to afford the home yourself by getting qualified at a local lenderIf you are solely relying on someone else as well without a reserve your level of risk just increased significantly

Lastly a Heloc will "Never" act as an asset or PITI reserve so if you fail to have sufficient funds required in reserves (Cash) then your will not buy multiple investment rentals.

That leaves your reservation payout with a balance of $94.75. 

So if the bank reserves $100k and gets title then sells the REO for $120k the redeeming party owes the $120k.  

If you can pay less than rent, and if you have sufficient reserves, that's the way to go.