The modeling of this is actually pretty easy (see link: 42-unit proforma sample), but my model treats the pre-refi loan as I/O, but that can be updated based on your deal.

Based on our 1031 and commercial loan, we are trying to figure out how to separate out some of the duds.

I don't know your living situation but if your paying x,xxx for rent or a mortgage and instead by living in one side and renting out the other you will be paying y,yyy instead and y is less then x that's great, especially if you can rent out your primary residence and make income there too. 

If you can find that, I would recommend a rehab loan to help accommodate the repair costs and do a modified 'BRRRR', or just sell it when you are done.Is this your first investment? 

But I don't know your personal situation and all the financial details. 

Is it hard money loans, angel investors, etc?

Texas does have specific rules regarding home equity loans and cash-out refinancing (often referred to as "Texas Equity Section 50(a)(6)"), but these don’t prohibit homeowners from using funds for investment properties.

If it is someone you know you can give them a straight return as if its a loan - can provide a lower interest rate to provide upside - it really depends on the lender and what are they concerned with and what is their risk profile. 

Example: If you take out a loan for 7% you would want to make more than 7% to make it worth it, and probably significantly more.

Is the loan assumable?