You can accidentally become an investor by keeping your primary and moving but that's slightly different then traditional investment models.  

Interest paid would be treated just as if buyer were using traditional financing. 

What kind of marketing is done in the area, traditional may not work in that market. 

This sounds to me more like they ran into some costs that were unanticipated vs a traditional "rehab" so I don't see the turn around being a problem.

Let me explain what I mean...Traditional marketing like radio, tv, newspaper, direct mail, flyers and card decks are next to worthless and they cost too much money in most cases.  

I was only familiar with collateralized debt.So when I was lamenting the fact that I could not get money for more homes an entrepreneur friend said, “call the bank and get a signature loan”.Having never heard of this before, I called, and sure enough, IF you have good credit and income, a bank will give you $25-150K just for your signature…to go buy cars, pools and pay for stuff you don’t need.Or, you can use it to buydistressed real-estate.So, here’s where it could go bad.Don’t be stupid.Have your exit strategies.Then execute.My typical deals look like this:HUD/Homepath/VA forclosure wants $41K for a home with an ARV of $65-75K.Let’s assume it needs $10K.I start my bidding ridiculously low, so $24K, but eventually get it for $28.5K.I use “cash” and close fast and get it rehabbed in 2 months…could be faster, but that’s the average.Immediately after I close, I am looking for ways to collateralize the debt…ie REFI.Because right now, I own the home OUTRIGHT, w/ no liens.I do have this other debt not associated with the home and I want to pay it off ASAP before I have to make my first payment.I can 1) use a portfolio lender (typically 80% of receipts, then I retire the rest of the loan w/ my cash).2) Wait 6 months and use traditional financing where I have the possibility to getting all of my money out of the deal since they go off of appraisals, not receipts, typically 75% LTV.While I wait 6 months, my payments on $35K are around $500/mo.Home rents for $850, so I can do this and still pay the bills.3) flip the property to a new home owner and make 7-10K after expenses or 4) do nothing and pay the house off in 7 yrs w/ the 9% signature loan.I hear of people using hard money and the expenses associated, but for the smaller deals like these, IF you have good credit, they don’t make sense.Thoughts?

Dreams of savings down the road go away when they factor in the additional mortgage cost created by that extra upfront cost.When I was still building in Northern Idaho and put in energy efficient devices advertising them was a negative and several asked if I would take out the non traditional high efficiency tankless hot water heating system.I build to green certification standards but I am  not willing to pay the inspector for certifying them green especially since he had to approve the plans for the homes to be built.I wish you much luck and support your intent but the reality, at least in my experience, is people are willing to talk about being green but won't pay extra or go out of there way to be green if there is even the slightest hindrance to their life style.  

The amount you withdraw is still included in your taxable income if you are withdrawing from a 401k or a Traditional IRA.  

I looked into doing an FHA into a 4plex here the problem is that everything is going for cash offers or traditional financing at the worst.

I don't want to do Traditional Real Estate anymore!