This is called using dry funds and it is not illegal per se' but most title companies these days will not allow them as they can not insure title.

I don’t make your state laws per se but I wouldn’t do it prior to ownership simply because of human nature… both of the tenant and former owner. 

If you're only investing in rental property, your best resource is the Apartment Association of SE WI. 

I did not have it "set up" per se, but I did form a relationship with a lender and had a pretty strong indication that I would be able to refi after rehabbing my cash purchase.I actually found 2 lenders, both small and local.

Your family income and family frugality is another HUGE advantage, especially when combined with the previous point about housing costs in SE WI.  

I wouldn't worry about calculating return, per se.

There are plenty of worthwhile investments at the 1% level, and in my opinion, even at the .8-.9%.Is the home located in SE Raleigh?

Generally, interest income is also appropriately classified as portfolio income (ordinary income and portfolio income are not mutually exclusive) unless the lender is in the trade or business of lending money, at which point the income may be appropriately treated as trade or business income subject to SE taxes.So, seems like all 3 of us have been in agreement all along

A dwelling needn't be occupied per se to be claimed as a homestead, however, you would need to prove with undeniable certainty that there has been a total abandonment with an intention not to return.

I will say that if you are not grossing $118.5k in your day job, you'll be subject to SE tax unless you can shift it to your wife.