If this is the case, yes, you will max out quickly, like I did.The other way is to find a lender that looks at a property, and only adds the profit to your income side.... so a single family house makes $300/month after all expenses.... it doesn't matter how much you pay for the house... it improves your DTI.Assuming no one is screwing up, that variance you describe should be the difference between an owner occupied MFR (former), and a non-owner occupied investment property (latter).

There is some drywall damage where the wiring was pulled that will need replacement.My question is based on the damage described above would a permit be needed in the Pueblo CO area to address these changes or could I hire a handyman or do the changes myself.  

I am evaluating a property that has many similarities to the one you are describing. 30 units (smaller), master metered utilities, not managed very well and would be classified as class C property.

Try calling yours, describe what you're intending to do and see what they say.

If you want, adjust it to no minimum to see that most houses in the area you described sold for less than $40k

I've already described what equity stripping is and it's 100% legal and doesn't involve any kind of fraud. 

I am in nearly the exact situation as you describe.

@Andrew Glenn For a situation such as you have describes, is exactly what a Builder's Risk Policy is specially designed for. 

That's one of the problems with wholesaling (with the way I described it above) is that you're now bumping up to (and sometimes crossing into) the realm of unlicensed brokerage activity, which is a big no-no with most state regulatory agencies. 

What you have described is predatory dealing, and that is exactly why Dodd-Frank was put in place as it was.You may be exempt from that Act with less than 3 sales, you're never exempt from predatory dealing, so, exempt or not, best is to follow the guidelines.