In my experience, cash flow is key, especially for long-term holds, so running a detailed DSCR (Debt Service Coverage Ratio) analysis might be a good step here.On the flip side, if you're eyeing faster returns, a flip might be more lucrative.

Conventional loans that use your debt to income / DTI to structure the loan require 12 months seasoning to use the new appraised value for a cash out refinance.

You or both of you might think you have a $1.3M home but in reality its a $975K debt!

The terms on the debt look good.

But thanks for giving me more to think about! 

Quote from @Alex Thomsen: Quote from @Jason Wray: Alex,There is never a need to put that much money in earnest its usually because the seller or the builder is in a bind and need to quickly settle their debts or pay their vendors.

To do delayed financing or a cash out, you can go conventional where you use your debt to income / DTI ratio to finance or you can do a DSCR loan if an investment property.

I would also put part of it in a debt fund. 

Maybe they know the owners or were able to get the owners to let them see the inside.The process would be significantly improved if there was an expiration time for the owners to become current on the tax debt. 

Is the 5 property ceiling (estimate, of course) because of debt to income ratio?