I want to create a fund that will allow me to purchase distressed homes, fix them up, and sell with owner financing (possibly including a 5 year balloon so as to be able to recapitalize periodically and give investors a shorter horizon).

Start with a fix and flip loan - this will include a percentage of the purchase price and usually 100% of the rehab.

You purchased your property in 2017 with an expected rent amount of $1,549 on the original property evaluation. 

We spent about a month fixing up the place.

As a MF agent who spends a large amount of time calling apartment owners (or rather, numbers purporting to be apartment owners), please believe me that reaching out to random run down buildings owners is unlikely to get you any deals.

This amounts to lost opportunity because if you had purchased RE, at the closing it can start producing return. 5) ADUs detract from the existing structure whether this is privacy, a garage, or just yard space. 6) this is related to number 1, but there are many more buyers looking to purchase homes for their family than there are RE investors looking to purchase small unit count properties.

the costs for the Airbnb furnishings could be anywhere from $20K- $30K.. are hard money lenders willing to include this amount in the initial loan? 

Even though the interest rates are high, it’s a great tool for people who don’t have all the cash to do a fix-and-flip. 

Would you demand they pay for the fix?  

Once a tenant is in and they sign a year lease, there’s not too much to worry about aside from the occasional fix here and there.