While I have a fantastic rate, the co-owner's giving me the option to refinance or he'll force a sale.

Your options are greater ahead of the transaction as opposed to when the transaction has already been entered into.Best of luck to you!

In addition to conventional loans and FHA loans, if either you or your wife are veterans, the VA also has a rehab program.I'd be happy to discuss my rehab experience both as an investor and as a mortgage broker, and at least help you think through your options. 

Your best option would be to refinance your loan (if any) and get a construction loan for the improvements.

If you won't be occupying a unit and at least one of the units is occupied by a tenant, you will want to purchase a landlord dwelling policy (there are other options besides a landlord policy but I won't get into that here). 

What you want to avoid is a lengthy contract with extension options.

If you plan to invest in multiple states or require advanced asset protection, consult a CPA or attorney to explore options like a holding company structure.

If you had no knowledge and they broke the lease I'd issue a notice of non renewal, but give them the option to remove the cats.

My client had some things come up that prevented her from executing, but these were some of the options I had put together for her, a regional bank, a regional CU, and a national bank.Reminder that NOI sizes CRE debt, and that's often what determines the down payment requirement, not anything to do with the client or particular lender, just the property itself.

The original post leaves the door open for a challenge by the IRS, so the safe harbor of holding it for investment for two full years is the safer option.