If they are going to be a passive investor while you do all the work, this may be treated as a security under the rules and regulations of the SEC.

Well, thanks to 2009/2010, banks made a lot of loans based on hope and faith and making pretty risky loans that ended up kinda badly.So now they need to have a dis-interested (ie no financial involvement beyond his fee) party to give a professional (ie licensed and regulated) OPINION on the value of the property.However, appraisers are only giving an opinion or educated guess which can be wrong.  

"investing in a holding company" sounds like a syndication, and that's a security regulated by the SEC. 

You probably got what is called a "conforming loan" therefore the loan will be sold into the secondary market and will be subject to random audits, so there is some risk in doing this, but from my experience as a Bank Regulator, I have never seen or heard of a loan being called due to this. 

But I just don’t know the rules and regulations and market demand on pre-decorated property for tenants and given that how to approach buying furniture for now.

As you research, pay attention to the short term rental regulations in the city/HOA where you are looking. 

Some states may have regulations on what you can/can not ask.

Hi, I am having a difficult time finding 5-50 unit small apartment owner occupied loans are there regulations against this or am I just not typing the correct terms to search for a lender that offers this ?

Always check your latest updates for RE housing regulations within your local area.   

Fortunately, we are renting out a property in an area that has reasonable laws and regulations for landlords.