Many Realtors will suggest purchasing a property using a FHA Loan, to reduce your out of pocket money.

He can put the money into a savings account.Her excuse is that she had to pay off her student loans because I left her high and dry after our divorce.

Most lenders will for try to send you down other roads first such as a loan mod or short sale, before they agree to DIL. 

I would highly recommend doing a renovation loan like the 203k or homestyle - you are able to leverage SO MUCH CASH for such a low down payment. 

if you need $200K for a project, no one is going to loan you $200K - you need a down payment, holding costs, and you need to know what you're doing or you'll just turn that $200K into $150K.good luck

Can you go a little in to how you were able to pay the loan with the HELOC.

With VA loans, you’ve got a huge advantage to get started with little to no money down, and military bases are perfect for long-term or short-term rentals.

Determine the cost of construction (hiring a contractor in the GNO area is going to start around $165-175/sqft to build) and be sure to include all holding costs, as well as interest in the loan.

The reason I say this is because you probably have a loan on the properties, or one will have to get a loan to buy out the other.

Points and loan details are TBD still as we're just getting the tentative process down on paper as we wade into the details.