Before these tenants stopped paying their rent, I secured replacement tenants for their apartment who are scheduled to move in a week after the current tenants were originally going to leave.

That being said I have read horror stories about leaving property to several offspring and/or family but I like to think that I’m raising them responsibly and I intend to pass on all my knowledge about it once the time comes.

I've definitely considered some type of hard money, although my thinking was to use a FHA or conventional for that matter to leave myself with 2 exit strategies after the rehab.

My biggest concern is that I’m worried may still not the the time.

I am not saying you wont find a gem, but you can be sure much has been picked through already (unless they sell them auction-style), which leaves the properties that are less desirable, and plenty of these aren't worth getting for free!!!

You’ll end up leaving the down payment on the LOC, then pay that remaining balance off with your profits.

Leaving only 15% privately held. 

I'm not as concerned with interest rate as I am not seeing a closing sheet packed with ******** fees.

Although, I have someone who wished to purchase the home through a VA loan, I have denied her because I am more concerned with creating passive income.My Question:Found a renter at $875 a month. 

It is that basis that you need to be concerned with.