@Troy Gandee Unfortunately I will be out of town for work, but thank you for extending the invite.

The second mortgage would naturally be registered against title to protect the interests of your friend.If your friend extended you an interest-only second for 5-years (or however long until your primary mortgage term expires).  

Would the following be examples of typical downsides to this strategy: - rehab amount falls below minimum loan requirement - not being able to refinance / use deferred refi since I'm using a loan for the rehab vs. cash- ARV appraises less than expected, and hence presents a challenge in repaying the HML solely through a cash-out refi - extended holding costs through being unable to refinance until the required seasoning time period ends (e.g., 6 months, 1 year)Just trying to get an idea about what obstacles I should anticipate if using this strategy.

We had to extend the contract twice waiting on them.

Keep improving as much of the property as you can during this extended rehab.

And the foundation extends fairly high above ground, so should not be too difficult to create the required windows.  

My advice in that range would be to look for a nice starter home in a decent area to fix up while they live in it then sell it, like an extended flip. 

So here's the run down.Deal (Assignment)4 bed 2 1/2 bath nice newer Neighborhood on a Cul-De-Sac $280,000 Purchase Price (Owner Owes $250,000 and home is worth $280,000)$1650 Rent (this is what current owners pay to cover PITI and this is market)1 year lease with the option to extend 6 monthsOption Fee/Consideration: 3-5% (this will go towards purchase price)Currently I have the home under contract with an Option which I plan on assigning to the new Tenant-Buyer since there is no room for a sandwich (rent is at market rent and price is at market price).

You can make educated guesses that the market has extended itself a little far.

And by adding it to the lease, the tenant's insurance coverage will be extended to the storage unit.