However, from an asset management perspective, it seems like it is not wise to pull out all of the equity because you'll be over-leveraged with tons of debt on the books.

I guarantee the top 5% wealth used leverage (almost all) to obtain their wealth and would never pay off a low interest loan early. 

Originally posted by @Jye O'Brien:@Engelo Rumora if I was to do it where would I start to find finance.Great questionI don't even know who funds foreign investors It would mostly likely be asset based lenders like a Lima One Capital, etc...Much success

Be careful though because some cities and/or counties don't allow short term rentals or they might but you have to obtain a permit or business license (can be expensive) and people that are doing airbnb in those places and disregard the law or ordinances can be fined.

Should I partner and pay him back, purchase the property cash, and then obtain the loan to rehab?

the filing to get the two or three permits, like motel permit and short rate stay permits is not the issue, they want us not to take any renters until this is obtained that is the killer here. we have retained an attorney and are hoping they understand that this is a busienss and will suffer hardship if we stop the renting till permits and licenses are issued'

(b) Required Documentation The Mortgagee must obtain a copy of the Borrower’s military orders evidencing the Borrower’s Active Duty status and that the duty station is more than 100 miles from the subject Property.

My girlfriend and I are looking to rent in the city and my plan is to purchase an REO or foreclosure while we rent, obtain a 203k loan and rehab the property during our rental tenure.

You would be wise to obtain a Phase I Environmental Site Assessment to learn if there are any problems which will need to be addressed. 

Does anyone have suggestions on which bank(s) or credit union(s) will loan on a home(s) for  $45,000 or under? In my area you can buy 2/3 bedroom houses ready to rent out for around $42-45,000. It seems like most bank...