It may cause you a problem if the Insurance Company has not agreed to it. 

Anything you ad can and will break and cause your phone to ring.

My question is this: We've analyzed several deals in our target area and found that if we're going to live in one of the units, it causes the property to not cash flow.

This then causes the issue of not being able to refinance out of it, you are forced to sell.I've done the buy, rehab, rent, refinance and I realized this same issue recently when I was looking around at other financing options.  

To borrow the downpayment and not disclose it to the lender would be fraud ... which could be a cause behind "all hell will break loose".As for not being able to lock the interest rate in for 30-yrs, that is not necessarily a bad thing (when I bought my first property, interest rates were around 16%).  

Some tenants will abuse it and cause much problems later on down the rode for you. 

Just cause the lien is canned doesn't mean the fees don't run with the land!!

Pro: Higher day one cash faux.Con: You need to hop on a plane (or long car drive) to visit your property, which leads to ...Con: You are less familiar with the market.Con: You are 100% dependent on complete strangers to make or break your investment for you and keep your best financial interests at heart above their own.Con: Can't easily verify work is being completed in a quality or timely manner.Con: If problems do arise, it will take you longer to find out and they will grow larger in that time.Con: If something goes wrong that your team can't fix (or in all likelyhood caused) then it is harder to for you to step in to fix it, stabilize the asset, and recover.Con: Lower appreciation and rent growth ... if you think this is speculative and not consistent, then review the last 50 years of price trends in the market you are in now vs the out of state market you are considering.Con: Lower tenant quality.

I may call to get some info cause it seems too good to be true.

Also, would that insurance arrangement cause any issues during the eviction process if I had to force someone out?