I couldnt count "future income" so they think I was losing about $2000 monthly when in fact I would be making at least an extra $2500 with the new place.My buyers broker suggested a mortgagor that has many loan products including a 20% down nonconforming mortgage.

However there are FHA products that allow some limited rehabilitation funds.

If I am "guilty/liable" is there penalties for this or is the notice simply considered defective? 

As you are vetting contractors, I'd recommending trying to understand what product they will be using. 

Well when that happens obviously there isn’t as much production and it goes down the line.

They'll miss many framing/structural defects and also many electrical issues.

If you could find two flip-and-hold properties a year that met even a 90% cash-out refinance metric, you could build a portfolio of a dozen rentals before you even had to think about where to access more capital.That might be a slower strategy than you hope for, but if you did it that way, you'd definitely have a stable, productive portfolio that would spin off a fair amount of cash-flow.

You're at least a $100k shy of getting into single family product.  

This was developed by one of our awesome product managers, Account Closed.

I would visit a non-traditional mortgage originator to see what lenders he or she works with and what products they support without a DTI.Credit score will have to be > 580 and cash position will have to be enough to cover the difference between 96.5% of appraised value and sale price, plus closing costs.