You may be able to get it rolled into the loan, and escrowed to be released as improvements are made.

As a former bank regulator for more than 7 years, I can tell you that if regulators have already identified a risk, discussed it internally, then produced a formally issued document and press release that they were in agreement on internally, the issue has usually already been around for a while, and is probably past where it should be!!!

@Shari Peterson when you provide transactional funding, even same day , does title company perfect your note and mortgage on A then release/satisfy for B-C?

Likely, they won't release the $1600 for the fence.

If your tenant turnover is only 1 or 2 a year and each unit can be re-leased in 1 month at most (including any unit turn activities), then you are well within your budget.

If you are dealing with out of state or construction from a far distance, consider using an attorney's escrow account, and hire an independent building inspector to inspect each draw before payment is made.Upon completion make sure that the general contractor and any other contractor or sub that works on the house signs a lien release waiver.  

@Jason McDougall are you even sure the IRS will do partial releases?

I wrote a book on this that was released in January called Cashing In Tax Free.

I wrote a book on this that was released in January called Cashing In Tax Free.

It  may be invalid due to age, it may have been paid and never released, or may be gone by operation of law via the tax sale.