The insurance company did not think it was a problem and approved me, then later changed their mind. I

You *might* be able to argue it is maintaining its value against inflation, but I am not sure of even that because the way the Fed calculates inflation in my mind is a bit flawed.

@Mindy Jensen - I realize that.

I personally don't get it other than people are generally suspicious when it comes to real estate transactions.For the home inspector, one thing that comes to mind is conflict of interest. 

Something to keep in mind is if there isn't anything you can do to improve the property massively from a value standpoint, your FHA loan will be stuck to the property unless you have a rather large appreciation spike in the area. 

First thing that comes to mind is a frickin knuckle sandwich!

Any how I am committed now and in a much better financial state and just overall in a more serious state of mind.  I

Michael that's awesome maybe when I find a good deal on a multifamily and show them the numbers they will change there mind. I

I'm not sure what the ARV will be, but similar houses in my area have recently been selling for ~300K and I believe I could likely rent it for ~2.2K/mo.Question #1 - Funding: In order to fund the ~50K renovation, I'm going to need to take equity out of my current home (keep in mind I own the house outright, have no other debt and have somewhere around a 740 credit score).

He probably doesn't want it that badly, or he probably doesn't think he has a true need for your product which in his mind is a "high-risk" investment without the promise to have solid returns.