I also think the lender is more amenable to a payoff if the property has accrued debts and liabilities other than the mortgages (liens against the borrower, HOA liens, property taxes).

So what I read from that, is non-arms length mortgages are much more feasible than non-arms length.Out of curiosity, what are some ways that others started raising funds to start real estate investing?  

You've piqued my curiosity.

Also, more out of curiosity than anything else, how did the neighborhood react to the build?

But you can set up re-accruing payments (mortgages, life insurance, etc.).

Asking to satisfy my curiosity only.

One question out of curiosity is why did she remove the upgrades-did she plan on using them elsewhere? 

At least with a LOC, you can determine how much to take out and the money sits ready not accruing any interest until you use it.

one thing not mentioned yet- if you comingle business and personal on one card and accrue interest, you can't deduct the interest as a business expense.  

Not collecting them within a "reasonable" time of when they're due has been court interpreted as constructively altering the lease to eliminate late fees entirely.So at least in Ca, you'd best collect the late fees as they accrue and not wait until later.