It's an REO property that needs some work, so I doubt you could get a conventional mortgage (maybe a 203k, but I can't afford the downpayment).  

You will incur interest charges on the money that you physically utilize from the account.  

I only see market share growing.I always recommend going conventional first. 

Although we used conventional means (30y, 25% down) to finance these two purchases, we are looking to use unconventional means to finance our next purchase.  

I would suggest checking your local market for what the typical PM charges (likely between 7.5% - 10%).

That's one of the reasons it's tough to use conventional lenders for flips and/or distressed properties. 

Even though the property would be occupied by your kids, since you are going to charge market rent going forward, your loss is not limited to income because of the vacation home rule as you were limited before.  

How much are you charging for rent? 

@Chris DunlopYou can move from your conventional IRA plans to self-directed IRA plans. 

@Zachary Critchett with conventional financing I believe most places are at 6 months of seasoning.