Hi David, If building long-term equity and scaling quickly are priorities, then option 2 aligns better for you. 

The fact that a company has stoped paying interest on a promissory note and is exercising an option stated in the note to convert the note to equity is not in and of itself indicative of any fraud.  

If the rent stabilizes, I can then consider refinancing these properties using DSCR or other valid options (please educate me, and let me know what other options you think are valid).

The asset was sold a couple years later and the operator gave all investors the option to exchange into a new acquisition or liquidate.

As you indicated you have plenty of options to start.

And, perhaps most importantly, make sure you have access to flexible financing options that can help you adapt to new market conditions.

Alot of unknowns as you don't have the ability to walk the property beforehand, but interesting process, and pretty good deals exist there.While the Trustee Sales are cash purchases, there are many hard money options that can turn over the funds in time for the 24 hour funding required to complete the purchase.If you are interested, let me know and I can go into more detail, as well as make some other suggestions for you to consider. 

Would a home equity loan be a viable option in this situation, especially in regards to eliminating some of the red tape I'm running into with a refinancing an scorp-owned property?

A 1031 exchange into multiple industrial properties, a mix of asset types, or even a REIT investment could spread risk while keeping you exposed to real estate.Hope this helps—sounds like you’re in a strong position with good options either way!

Many good rental options in San Antonio/New Braunfels area.