BUT that can be remedied by indeed being honest AND transparent and explaining the risks, advantages and disadvantages involved.

What would be the advantages/disadvantages of using a HML vs leveraging the equity in my (house-hacked) home?

If you don't invest locally, you are at a major disadvantage to people who know that area.

There are many advantages to doing that when the market you live is has some disadvantages. 

The disadvantages of owning property as a military member is that you are probably going to be re-stationed within 3 years.  

Also with FHA your requirements on the seller are going to be higher than even that of a conventional mortgage as FHA could have seller required repairs before they will loan on a property.You are at a big disadvantage in a competitive environment.

L-ville and Lexington each provide their own advantages and disadvantages for REI.

Now the disadvantages of new construction; 1.

I haven't called him back yet, but will, to try and find out more.....BUT, the first would seem the biggest stumbling block.I did a lot of negotiations in a prior life, including as a settlement conference judge and mediator, and was pretty successful in getting people to recognize the financial disadvantages of not resolving their disputes instead of going forward (in those days, to jury trials), but the lawyer for this lender seems uninterested. 

Having an emotional attachment to a property is starting things off at a disadvantage because even a decent tenant isn't going to act like you think they should all of the time.