And lets say you then rehab it only to find out there is bad title and you make a title claim.. if there is no loan on it your only going to get 50k from title insurance and you will lose the 50k you paid for the assignment and any money you put into rehab. 

This is one way to manage costs risk.The ways to own the property besides FHA & conventional loans is with private loans, investor DSCR loans (non owner occupied); seller financing, lease options, partnering with others to take the property down..... 

I mean, don't get me wrong, we have to comp the property...so if you are looking to REHAB the property and make it something different, then you need a rehab loan first and then refinance after type of thing. 

If you don’t care about maximizing loan amount then you could start whenever.

Some investors use conventional loans, while others use private lenders, hard money loans, or partnerships.

If you are worried about out of pocket costs, see if maybe a rehab loan is an option to get everything needed done now and refinance in 3 months when everything is complete.

I can say from having taught classes on these loans that your contractor will be the biggest key to your success.

Alternatively, your sibling might use a 1031 exchange to defer taxes by reinvesting in like-kind properties, though this doesn't directly fund a primary residence.Other ideas include leveraging a HELOC on the rental properties for the down payment, taking out a 401(k) loan, structuring an owner-financed agreement, or a lease-to-own arrangement.

Loan: 20% down, $4,038/month PITI.

And you have to pay PMI for the life of the loan.