@Ella Marie the Pro's are you can build long term wealth, the Cons are you can lose money if you cannot properly quantify risk.

I would try not to tie up any of the principal in down payments.Personally, I had a family member do this same thing, but they used an investment portfolio as the collateral instead of real estate.If you play your cards right, this might be the only short-term money you ever need.Please let us know what you end up doing.

And then to get money out of them you have to put money into them..

At the end of the day; you need more money to do something like this.MAX LTV on new builds is 80% LTC, Meaning if the build is $550,000 and Land is XAdd ($550,000 + x ) * .8 = LOAN AMOUNTYou would need to come in with MINIMUM 20% of the cost in addition to closing costs and reserves, $80,000 is not going to cut it for this project.

Keep in mind, you should have already had a conversation with the hard money Lender to know their terms and process, and be ready to perform. 

We're in the business to make money right?

Hope you don't put down large earnest money deposits... these guys will make sure you lose them! 

If you find you are unable to raise the money for an all-cash purchase, switching gears to Fannie will only work if you have a LONG time to close in your PSA or have many extension options (which usually require more hard earnest money.)

I figured why not just use a banks money instead of using a customers money and not have to deal with picky customers.

When you borrow money you agree to pay it back.