After you get the tenant buyer to be checked out by the RMLO, and you have a letter that says that if they pay down debt or increase their income or improve their FICO score over two years or whatever, they should be able to get a 3% FHA mortgage, you then have the tenant buyer deposit$$$$ into the title company or attorney’s office.8. 3% assignment fee to you9. first and last months rent to seller10.

So the underwriter looks to see where you are now with ALL sources of income and debt vs where you'll be after the purchase  and applies their maximums appropriately.The brokers I have worked with would not allow the 43% DTI as in your scenario, @Justin R.So the key is to either buy a rental such that it does not send you over the maximums or reduce your other debt or increase your other income until the ratios work.  

Similar to the use debt or pay-off property conversation. 

At least make sure that the current owner/tax debtor matches the person you're talking to. 

At some point will you sell a few to make a lump sum to payoff some of the debt or will you hold and simply let tenants pay it all off over 20 or 30 years?

If the property is owned by an LLC that you own, the LLC is the debtor.

If the property is owned by an LLC that you own, the LLC is the debtor.  

They might agree to some type of workout but they were looking for people who could perform.When an individual borrows on real estate property he signs a Note (which is basically a type of IOU) and a Deed to Secure Debt, or Mortgage (a collateral agreement which gives the lender the right to take the property if the borrower defaults on payment).

I can then use this cash in case of an "emergency" such as a new A/C unit, renters don't pay, can't find a renter, they trash the place, etc.The last things I want to do are borrow money from friends and family, rack up credit card debt, or hastily sell the house.Thanks for the advice.

That could play into whether or not the lien will be wiped out in the event of a Debtor's bankruptcy.