They want to keep the note long term but want to leverage or recapitalize using hypothecation (similar to #3 on Chris's list but with notes rather than homes). 

I purchase my personal investments to maximize their equity and hold long term.

I have some upcoming repairs needed that outweigh the Homestead Exemption and plan to make my primary home a long term rental in the next 7 years but the repairs can’t wait.  

This is how long-term success is built.

The city’s robust economic growth and steady population influx continue to drive strong rental demand, making it an ideal choice for long-term investment success.Best of luck!

In particular know exactly what you negative equity position will be and how long it will take at conservative cash flow numbers (near 50% of rent going to expenses other than P&I).  

I work with new investors all the time and have to get past newbie investor puberty which include Shiny Object Syndrome and  the mindset that this business is Quick Money with little to no effort (thanks to Social Media). 

For instance, the term could be 3 years and add a clause that says they have to return the property to the condition it was in when they moved in, not just keep their deposit. 

IT seems they have been around for a while, but not that long. 

However, there are other loans designed for fixer uppers referred to us hard money loans, bridge loans, or fix and flip loans but whatever you want to call them they're essentially short term, interest only loans with no prepayment penalties designed to finance a higher % of your purchase price and typically all of your renovations not to exceed a certain % of the ARV (typically 75% max).