Investors are already on board with the options weve got, just shopping for the best option.

Quote from @Samuel Pavlovcik: @Nicolas Tow Your Architect is correct that it sounds like the only option for you would be to obtain a Zoning Map Amendment to change to RT3.5 or higher.

Look into local tax incentives and financing options, and reach out to local real estate groups or mentors to better understand the market.Good luck!

An option to better understand and see the model without having to spend all the time is turnkey interesting.

DM if is you want to talk other options.

Credit is a factor as bad credit may limit options, or may have the lender require you to put 10 or 20 years of taxes and insurance into escrow. 

(This option would would not carry any debt, all debt would be paid in cash)Or keep our current house, rent it out, and cash flow NET monthly about $1,500?

While a western WA deal might not meet some Midwest cf metric like 1%, it will be above the market cap rate or below FMV of comparibles and give you options. 

Outside of raising money from others or seller financing, I am looking to see if there are private or other lending options that could cover 10-20% of a downpayment on these loans with a shorter loan term of say 5 years.

As for financing, make sure to explore options for using rental income to qualify, and be prepared for a 20% down payment.