I have a home i own outright sitting on about 800k in equity but because of a couple factors on my tax return i wouldn't be able to get a conventional loan.

Hi, I kind of gave up on the idea of house hacking within my area because of a few factors:High prices in NY for not much value in my opinion.Currently like where I am living and am a bit stuck there due to it being a co-op and gf not being able to rent place out for more than 2 years at a time.Then I thought:FHA loan could allow us to buy a higher cost multifamily property (if it makes sense) for very little down, and use a 203k loan to force a bump in equity if done right. 

However what are we going to do after cashing in $$$$$ in equity?

Do you think you're getting any built-in equity at that price?

I was able to put down close to 20% on my first condo (even though VA), which jump started my investing. 4 years later, that condo has ~$300k in equity, yes appreciation helps ;).

All in, these units have about $850,000 in equity.

We currently have about 60K in equity in our current house and we want to get into some single family rentals.

I agree with @Steven Stokes and @Ryan Gillette, these are some good terms for you, worse case scenario is they he cant pay it off after the 1 year balloon and you either A) extend the loan another year and have a chance to re-negotiate the termsB) foreclose on the home and now you have a 265K home with 120K in equity and have already received 18K on the loan noteeither way is not bad for you, and best case scenario the gentleman pays you off and you made 7% interest on your money for a 1 year deal.

During my day I come across people who are interested but im starting to think  you may be right @Anil Samuel today alone Ive come across 3 people that are negative in equity. but I will still continue to pitch the option to my free and clear prospects as the goal for me is building passive income thru rentals. wholesaling is only a tool to get to the goal

Once you purchase a cash flow positive property (commerical or otherwise) leverage to purchase additional commodities, evaluating the growth in equity conversly to debt servicing costs to increase your overall portfolio with non-correlated risks.