I told her that I need proof of liquid funds sufficient to cover 25% of the purchase price and to provide proof of that.  

Financing your second property can be tricky since lenders may only count 75% of rental income toward your debt-to-income ratio, so get pre-approved early.

Can they get pre-approved for a conventional loan and then switch to FHA once the 91-day requirement is met?

Quote from @Jason Hatfield: @Jaycee Greene  they require a non refundable deposit and give 48hrs to see proof of funds I would suggest developing a relationship with an HML/PML that would give you a "guidance line" that would basically be a "pre-approval" for situations like this to present to the buyer/auction company.

In other words, in the eyes of the IRS, the LLC would be non-existent. 

The mold house would only be a good investment if you can buy it at a low enough price to cover the necessary renovations.

Though he prefers to reposition existing multifamily properties, he has also subdivided land, built homes, and constructed self-storage.

I think this is a calculation a lot of homeowners are making right now--especially if they have a low interest mortgage, equity, and their house will cashflow as a rental.The choice is a personal one of course, but I think your future self will thank you if you pull out some equity from your existing home with a HELOC for the downpayment on the next house and a cushion renting your current home, use a property manager as you have other things to do, and buy the next house and do the same thing again.

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

We approached the existing lender for a loan assumption.