I will send contact requests to everyone that has commented so far.

I don't believe we would need the rental income from our current home to qualify for a new one.Based on some of your points, I have a couple additional questions/comments:"If we assume this is a single family home (if it is NOT please let me know as it will change the advice a lot) then you just need 5% equity to refinance.

If the water damage is getting into the next room, you may be talking lots of sheetrock work, flooring, some frame replacement and then the shower itself...... cost will vary depending on cheap fiberglass drop in or full tile etc etc....No way to comment on the cost....it may be dead on..... not enough info to comment

Please comment if you have done this recently (in the last 2 years).  

I'm going to dive into the comments this evening, but my first reaction is that I want to see confirmation that refinancing an existing loan (to yourself, no less) bypasses the seasoning restriction. 

@Eric Lefteroff thanks so much for the comment. 

Not enough information to comment.  

With your comment "Assuming they are not lying about past projects" is accurate and kept in mind:I would have my CPA go over the numbers, I'd have my attorney tell me about the liabilities of the structure they are proposing and I'd ask the partners what happens if the market changes and everything goes wrong.If all of that checks out to your satisfaction, and you want to be a passive investor then sure, people invest across the country all of the time.Ask your CPA about the tax liability in your particular circumstance.

@Bjorn Ahlblad Thanks for the advice and taking the time to comment.

That's the biggest problem.For sure, leave a reply to the comment.