Do I just walk into my local bank and ask them what i'd qualify for as an unsecured line of credit?

in this scenario, the prior owner or bank would have risk of loss, and (assuming the bank carried an insurance policy) would be entitled to the insurance proceeds? 

But I know that the banks don't like me buying another primary residence and buying "down in square footage" Do you have any strategies on how I can go around this obstacle and still be able to buy the duplex, 3-plex or 4-plex with a FHA loan and live in one of the units?

I want to get several quotes from banks/lending institutions, but she wants to interview no less than 15 banks and 5 credit unions and go back and forth with each one and pit them against each other in a "rate/closing cost war" to get the absolute best price. 

The only thing I would take out is having people list their bank account number, I don't think you will have an applicant willing to give that info to you anyway.One other thing to consider, are you charging an application fee?

You wouldn't want to put it in anything too volatile. https://www.nerdwallet.com/blog/banking/best-high-...

It's very unlikely that it'd be illegal if you want to be 100% you'd have to ask the bank or post up the terms of the new loan.

Also, the minimum down payment you need on a conventional investment property is 15%...however, not every bank follows that rule either.  

@Sam MillerFollowing are the similarities and differences between the solo 401k and the self-directed IRA.The Self-Directed IRA and Solo 401k SimilaritiesBoth were created by congress for individuals to save for retirement;Both may be invested in alternative investments such as real estate, precious metals tax liens, promissory notes, private company shares, and stocks and mutual funds, to name a few;Both allow for Roth contributions;Both are subject to prohibited transaction rules;Both are subject to federal taxes at time of distribution;Both allow for checkbook control for placing alternative investments;Both may be invested in annuities;Both are protected from creditors;Both allow for nondeductible contributions; andBoth are prohibited from investing in assets listed under I.R.C. 408(m).The Self-Directed IRA and Solo 401k DifferencesIn order to open a solo 401k, self-employment, whether on a part-time or full-time basis, is required;To open a self-directed IRA, self-employment income is not required;In order to gain IRA checkbook control over the self-directed IRA funds, a limited liability company (Checkbook IRA) must be utilized;The solo 401k allows for checkbook control from the onset;The solo 401k allows for personal loan known as a solo 401k loan;It is prohibited to borrow from your IRA;The Solo 401k may be invested in life insurance;The self-directed IRA may not be invested in life insurance;The solo 401k allow for high contribution amounts (for 2016, the solo 401k contribution limit is $53,000, whereas the self-directed IRA contribution limit is $5,500);The solo 401k business owner can serve as trustee of the solo 401k;The self-directed IRA participant/owner may not serve as trustee or custodian of her IRA; instead, a trust company or bank institution is required;When distributions commence from the solo 401k a mandatory 20% of federal taxes must be withheld from each distribution and submitted electronically to the IRS by the 15th of the month following the date of each distribution;Rollovers and/or transfers from IRAs or qualified plans (e.g., former employer 401k) to a solo 401k are not reported on Form 5498, but rather on Form 5500-EZ, but only if the air market value of the solo 401k exceeds $250K as of the end of the plan year (generally 12/31);When funds are rolled over or transferred from an IRA or 401k to a self-directed IRA, the amount deposited into the self-directed IRA is reported on Form 5498 by the receiving self-directed IRA custodian by May of the year following the rollover/transfer.Rollovers (provided the 60 day rollover window is satisfied) from an IRA to a Solo 401k or self-directed IRA are reported on lines 15a and 15b of Form 1040;Pre-tax IRA contributions on reported on line 32 of Form 1040;Pre-tax solo 401k contributions are reported on line 28 of Form 1040;Roth solo 401k funds are subject to RMDs;A Roth 401k may be transferred to a Roth IRA (Note that from a planning perspective, it may be advantageous to transfer Roth Solo 401k funds to a Roth IRA before turning age 70 ½ in order to escape the Roth RMD requirement applicable to Roth 401k contributions including Roth Solo 401k contributions and earnings.)

Should we have a joint bank account separate from our own strictly for the REI business to keep track of funds and cash flow recycling and etc?