My question was about whether I'm making a mistake investing in a property that doesn't have the best ROI, but will allow me to borrow against it for more strategic investing in the future.

Get pre-approved so you can move quickly when the time comes to put in an offer.Are you going to use DCHPAP or a down payment assistance program? 

Hello BiggerPockets friends,I guess I need some help in understanding the benefit and strategic advantage of cashing out appreciation on a property and using it to buy another property.If I appraise a property, I am borrowing that against another loan to pay some of the original mortgage and/or buy second property?

How does the draw process/schedule work when borrowing from a private lender (in as much detail as possible)?

Without experience, hard money lenders will look at the following criteria:IncomeCreditCashAdditionally as a way to set yourself apart from other borrowers is your responsiveness.

In that sense, I'm effectively "borrowing" earning power from my retirement account to make cash flow today. 

Happy to try and assist.

Just my $0.02 If there’s anything else I may be able to assist you with just let me know.

We keep getting told that because we are first time homebuyers and eligible for FHA loans for $250,000 and make less money so we also qualify for down payment assistance programs, that we are smart to invest in real estate.

I would buy  out the tenant, assist as much as possible in locating a new home for them as well as assist with their physical move.The mistake would be entirely my responsibility and I would do what ever is necessary to comply with the HOA.If the tenants refuse to move I would file a eviction and hope it will be motivation enough to get them to reconsider moving.