You also need the operating cash to do rehab.I say this because you mention FHA and low money.

And @Jesse Rivera, I did not know there was a low-doc or bank statement HELOC. 

I partner with a rockstar contractor and a top level investor friendly agent and if we buy right and nail our numbers, there is plenty to split at the end.  

One thought was to move the thermostats from the apartments to a single conditioned space and place temperature monitors in each unit to make sure the apartments are at a comfortable level.

But the level of negative cash flow that you're talking about is quite high and it sounds like it's not something you're comfortable with and thus should look for something else.

Lexington is a weird market with low occupancy, 90-92%, and there aren't many assets in the market.

The inspection may reveal things that you missed or didn't know to look for (damaged roof, humidity levels in walls/ceilings etc). 

Because my DIT is low, maybe Case 2 for fourplex is my preferred loan type than Case 1 if I want to invest locally.

However, pricing in Austin is still substantially above pre-pandemic levels.

Here are a few high level thoughts for you as a beginner:-Don't lend in second position-Don't do deals with new investors-Don't experiment with new strategies, even with experiences investors- ie, don't jump in to a first development project with someone just because they've flipped 20 houses.