Real estate is not the stock market and it's called buy & hold and not buy & sell for a reason.I did sell a few properties about 10 years ago when I learned the hard way that going into cheaper neighborhoods was not the right strategy for me, so that was basically a strategy correction and it was necessary, but also costly both in terms of dollars and time.

@Holly Thorsen see above for potential challenges tapping your equity in the rental.You only need 5% down for a regular mortgage, 3% down for an FHA mortgage - so why don't you have the funds?

Hiring a lawyer sounds expensive, but it is way cheaper than hiring a amateur (in this case yourself) who costs you money and provides no results (and then you need to hire a professional anyway).My personal philosophy is to "do it right, or do it twice" and its way cheaper to do it right once. 

The seller also has a mortgage on the property.

I'll look into qualifying for mortgages and how that whole process works.

In your example, $250 in utility bills is much cheaper than $2500 to fix frozen-pipe damages!

Remember: cheaper doesn't mean you'll make more money.Start by going to www.narpm.org to search their directory of managers.

I’m aware that thousands of notes with their corresponding Mortgages/DOT’s are packaged up and as a whole create an MBS (mortgage backed security).

If the property requires rehab, the Realtor and/ or Mortgage Broker will suggest applying, for a FHA 203k Loan.

Those are probably cheaper than hard money anyway.