Waiting until you get a deal under contract to then see if you can put together the debt and equity is a recipe for disaster.

In this case even if the project went south and you broke even or even lost money, the equity (debt) you used would still be covered by the income you are earning on the rental property. 

Clearly the note is more than just evidence of a debt, right?

Let’s break this down because there’s a lot to unpack here.The real question is, how well is that debt working for you?

We already paid them a pretty sizeable entry fee ($30k) to cover some of their equity and debt in another project.

How much weight do you give to the cash flow benefit of cheap debt when the property is priced above market?

@Chris Kay beleive you can do DSR loans without a job as they qualify the property, not the borrower.You'd still need 20-25% down though.That's where you have a decision:- Pay down the mortgage, setting yourself up for a future refinance to free up your VA Entitlement.OR- Save up for your next acquisition.Only YOU can make that decision as you have to be comfortable with the increasing debt-load risk and the additional time to manage everything.

It will be an identical home to the one I’m currently building, and I expect to need no more than $160K in financing.I’m not looking to overextend myself by taking on too much debt, but I want to make sure I’m approaching this in the right way. 

We have tried multiple local collection agencies, and we have not received a penny for over a hundred thousand dollars of bad debt submitted to them.We keep hearing, "It takes time" but it's been well over a year with the most recent one.

How much weight do you give to the cash flow benefit of cheap debt when the property is priced above market?