I would recommending looking at your property through the eyes of the NBA, or Next Best Alternative, to see if there is a market for you property as a mid-term rental. 

Are there any red flags I should watch out for when dealing with buyers who propose alternative arrangements like this?

@Devon Shives,Your situation has a lot of potential, but here’s a thought: A cash-out refi could work if you’re confident you can use the $30-35k effectively for your next property, but the higher rate and payment might indeed limit your borrowing power for another mortgage.Consider these alternatives:1.

Its return is achieved due to an alternate rent model.  

(I realize there are alternate structures - this is how we are doing it.).

Alternatively, you could continue growing as a personal account and then swap your account to a business account if/when you want to. airbnb.com/account-details allows you to pick if you are an individual, business, or other entity.

Alternatively, you can look into filing an affidavit.For the court hearing, be prepared to have all dates and proof to show the judge non-payment and any dates/times you interacted with the tenant.

The rate will change over time, so maybe not the best choice for some but its not a large some of money to adjust so I am ok with it as long as I get stellar returns from the properties that I purchase with it.

.- Plan: eliminate AMT - Alternative Minimum Tax.

To me the cost of purchasing cash flow is too high, better off being cash negative 2) alternate rent models: mtr, str, rent by room.