Your daughter will learn and greatly benefit from her Dad's smart money moves.

Federal loan interest rates currently sit at 3.73%, roughly the same rate as a 30-year mortgage, but is 0% until May 2022.Some factors I've considered that make this taking this $4,000 attractive:- I may be able to obtain lower interest rates with a larger down payment, offsetting student debt interest- Avoiding PMI by making a down payment over 20%- Booming housing market in my city with consistently increasing equity- Living several years in the home leaving time to grow equity, potentially making much more than I owe in student debt While all this may be legal, my biggest question is this - does this sound like a smart investment strategy?

Lenders are looking at what's left over because they're looking for the truth of your financial situation.You should try to accurately count all your expenses and reduce your tax burden, that's just being smart with your money. 

I use smart move for years if smart move says to accept most likely they are good to go, I’ve never had an issue but I did in the past approve tenants that says not to approve and it turned out pretty bad, so for me my personal experience it’s been working good for me. 

Now, if you can get the interest lower, which in turn would increase the CF, then even better, but if it's a choice between higher interest and higher CF, the choice is 100% of the time the same...higher CF.

FHA or a 3% down conventional loan would be a good choice. 

Unless you have a deal in the works, need cash fast, have other debts, or have fears about the market a conventional cash-out ReFi is the optimal choice.

You have made the choice, now it is about finding your investment method.

I work with a lot of investors and they tend to gravitate to some local guys, but the choice is yours of course.  

I agree with your choice, especially with foundation issues.You could also just take your time with renovations, little by little on your own free time.