This may be a long post, but I thought it would be good to walk through everything step-by-step, and explain my thinking along the way.If you want to stick with me through it all, here we go:I was not going to be getting a conventional mortgage for my first property for a number of reasons.First, I am still annoyed at the hoops I had to jump through to get a mortgage for my primary residence.Second, my liquid cash was on the lower end.Third, the properties that I would need to start out with would not be financeable anyway.Fourth, my DTI is on the high side, due to the decision that we made to take out a HELOC to complete interior improvements on my primary house.So, I decided that my path was going to be to form a single member LLC, and take a loan from my 401(k) at work to finance the down payment.Since I do not view the 401(k) loan as a long-term solution, I am treating like hard money, and pay it off ASAP.So, my first deal would be a flip, or a rental that was such a good deal, that I could re-fi out and pull all my cash out.I decided to reach out to the commercial lending department of the local credit union, which I am a member.The person I talked to (who became my lender) is fantastic.I told him what types of properties I was looking for, and that I’d look to turn them into rentals, or to flip them.I will never forget his response, which reminded me why I love this credit union.He said:“Typically, the deals you are talking about are much smaller than the deals we like to do.However, we also realize that you can not get to that level unless someone helps you get there.So, if the numbers make sense, we will see if any of our products fit.”Awesome!

If you negotiate a good enough deal that pays you then complete the transaction with the investor to buy the house you have under contract.

I can completely understand the impression of getting scammed when the tenant is showing the property - because it happens.  

The other one that fell through had a judgement filed against the homeowner right after we did the quit claim with the mortgagor and were about to close and redeem the property from the person that bought it at the sheriff sale.That judgement terminated the mortgagor's (and therefore our) ability to redeem that property.The response rate on our marketing campaigns has been extremely low; south of 1%, in fact.Our campaigns include door knocking, leaving notes on doors, as well as mailing the property and new addresses of the owners (when applicable).  

That's all I was asking, I'll have him quick claim deed the property to me.

Most people will choose to use their own cash to purchase the home then refi once the rehab is complete if you are looking to buy and hold.

I don't have calculated statistical data to back this claim up, and it could be regional, but it often seems that appraisers are more generous when it comes to appraised market rents than they are when it comes to value.I'll not bore you with the math, but the arithmetic is more generous if you do not intend to live in the property than if you do intend to live in the property (If you aren't going to live there, it is in theory possible to have a calculated DTI of 0.000%... which is in part why commercial financing uses DSCR not DTI). 

I completely understand and empathize. 

I would definitely submit a complete offer package with dates, terms, numbers, copy of an earnest money check, proof of funds, or pre approval.

Without pulling capital out, you will have more equity, and could potentially cash flow better on that 1 property, (ie. if you have the property completely paid off, you may cash flow very well) but is that the best use of your equity?