I would be patient and look for 3/2 or 4/2 houses that need a little work in a decent neighborhood but can be purchased and fixed up for under $25,000.00. 

This is run by Travis Tollestrup & Aaron Halderman who I've met at other events and they seem to have decent experience.

If your credit and equity in the current property is decent, I'd look at getting a lease for a renter on the unit you're living in and refi it or sell it off.  

If I sell this house I will have 2 down payments and decent reserves to purchase additional investment SFR. 

Area and demographics....decent anchor business and property condition, accessibility etc.

What worries me is that if I were to sell today for market value, the profit would be considered the difference between my new cost basis (which is now a decent bit lower than actual payoff) and sales price and I could very well end up paying money to sell, even when at first glance, there appears to be a gain. 

Well, I clicked thinking that I'd comment, but you shot me down, seeing as I am not a "new-ish" investor, and a guru to boot...hahaha

That should be a pretty decent area for you.

Since the last oil crisis, Houston has done an outstanding job of diversifying...With high-tech, healthcare, and alternative energies booming, petroleum just doesn't have the effect on us that it did in the past...it's now a smaller piece of the pie that is Houston.Many locals remember the hard times in the '80s, and are fearful that they will return, but when you look at all that the area has to offer (booming industries, affordable housing, great schools, investment opportunities, friendly people, decent winters, etc.) you realize that Houston still has a lot going for it.And even if things were to cool off a bit, that's beneficial to investors, as it means less home ownership and more renters!

Should I now go talk to banks about a conventional loan for "livable" houses or a HML for "non-liveable" houses to get pre-qualified (from what I have been reading, banks will not lend on houses that are not in decent condition) or should I try to get a deal under contract and then seek financing?