in my mind this works for the cash buyer but the leveraged buyer thinking they are going to pull all this equity so quickly well that may happen if they get stunning appreciation. but you know appreciation is gambling and a fools errand according to most BP buy and holders  :)  

They normally allow for 5% down, and in some cases 3% (I think thats for first time / lower income buyers). 

I normally advise against signing new leases on properties before you take ownership. 

I have a standard landlord policy with a $1k deductible but I'm not sure if I should pursue getting my insurance involved since I don't know if this type of full rewire would normally be covered by them. 

This is normally the care with single family with ADU and multifamily up to 4 units.

If you want to do house hacks, it is normally better to have that W2. 

@Jeffrey XenakisA owner-occupied loan normally requires the person who will be living in the property to be on the loan/deed.If you will be giving your friend $80,000 so he can secure a loan, you will want to protect yourself(just incase your friend dies and his estate says the property is 100% his and not yours...Also for him to just run away with the property).You likely want your name also on the deed.Financing through an LLC with more than 1 member normally requires commercial / portfolio lending which will be more than just 5% down.best of luck!

REI is all about taking risks, and since you only have enough capital to try out one strategy right now (perfectly normal for someone starting out - no, you're not behind the curve) then I would start with your safest bet that is going to make you more profitable in the long run, either with knowledge or cash flow... ideally both!

A co-signer really needs to have much more income than 'normal'. 

That's what's normal farther south. https://images.squarespace-cdn.com/content/58f01a4bb3db2bed6e841cab/1493138201241-ALFKKRQCDG3CZ7Q2BTID/apartment-building-steel-concrete-7.jpg?