Truthfully he will let us assume the current mortgage of $230K about $1500 per month.

Assuming you can financially support hiccups along the way I think it’s a solid strategy.

You could refinance out of the 203k and take cash out assuming the equity position is there at the end.  

You could put the money into a hard money loan fund (assuming you’re an accredited investor).  

In the instance of a BRRRR investment, and the owner is able to cashout his principle up-front, would it seem fair that (assuming a 15 year note), I would get the same proportional share on the property once it's free & clear in 15 years or if the house sells?

FYI - City marine, and I assume others, charge a primium to owners who do short term rentals.  

I assume you are doing a 30 year fixed 25% down conventional loan. 

I had heard so many stories of RE investors getting their start by buying their first investment property while living in it that I wrongly assumed that would be a possible way for someone to get started.

Hi Tom, I wouldn't say you are dead in the water, and without seeing your tax returns I can only speculate, but a few notes before you assume that you can't get a traditional mortgage... 

@Edwin GiraldoYour plan makes sense.I'm assuming you're looking to buy and hold and not for a single family primary residence...You should also consider that buying with cash will then give you options later to refinance to pull 60-75% out once the property is stabilized and generating income.