At the end of the project's life the land must be restored to a natural state and the materials must be recycled if possible, eg. stripping out metal, etc. 

For example, if your partner has income and no debt, perhaps you can invest through her, or if it makes sense to combine your income with her that might still get you below 50% DTI.

DSCR (Debt Service Coverage Ratio) loans are popular for real estate investors because they focus on property cash flow rather than personal income.

Incurring debt before you have sufficient earnings to support that debt.

Rental income carries the debt service 100% How did you find this deal and how did you negotiate it?

THEN, I plan to purchase the second home using a FHA or conventional loan (3%-5% down), for which I will likely pay the monthly cost out-of-pocket, maybe with some rental income support if it is a duplex.My concern is, I do not want to spend my savings or weigh down my debt-to-income ratio so much so that I cannot qualify for and pay the down payment and closing for the lending on the second home.Questions: - With the first home being multi-family, 75% of the rental income (or potential rental income initially) will relatively either maintain or boost my debt-to-income ratio from lenders' perspectives, right? 

That said, I will still try to provide some “clarity”.Purchasing a property “subject to “ the existing debt can be done two ways.  

I agree with @Shawn Ackerman I would start applying the cash flow to debt pay down.!

Your situation presents a classic trade-off between long-term appreciation potential and short-term debt reduction.

Eliminate debt, establish a budget, and save.