That will enable you to acquire the property, improve it, refinance (pay off loans), and then keep that property.

There's about a zero chance though that you go there with your story and proof and the judge tells you that you have to keep renting to them.

This is a great investment opportunity I don't want to pass up, so I want to explore all my options for financing.Secondary question- would it affect my mortgage approval chances if the loan for the down payment was a home equity loan vs. an unsecured loan vs. a private money loan?

And of course while we waited life kept us busy, units turned over, and we wrapped up some final improvements to the property we didn't get to in the first round.

If you are lending to real estate investors - you should secure it with the real estate that they purchase with the funds.In the chance that it is still unsecured and it goes unpaid - you are eligible to report a business bad debt on your tax return.This loss would potentially be able to offset your other income reported on your return(W-2, interest etc).

One part that struck me was about capital improvements and placing your property in service.

Before we finalized the offer on the properties, we ran out a 3 year capital expense plan to account for improving the properties that need it, either with deferred repairs or value add improvements.

However it would be in your best interest to have your closing attorney type it up (chances are they have a template and have done hundreds/thousands) and it will be a lot safer for you.

I can't take a chance at greatness if I don't throw my hat in the ring, right? 

That's less than a 0.03% chance of audit compared to the average 1-3% chance of audit.