Most lenders cap out the amount allowed on a sellers second. for example if the lender is giving you 75% LTV on the purchase they may allow an additional 5% on a sellers second leaving you still stuck with the 20% Have to have some skin in the game

Second, what do should I do before approaching the homeowner to ensure I can legally acquire the property. 

You will also find out in real time if the real estate investing career path is what you expected.As for the kids (I have three), they soak in everything at that age and I can't think of a better message a father can send than what you are contemplating.I wish you all the best and respect what you are trying to accomplish for you and your family, @Andrey Les.

My conscience was helped immensely by the fact that she told me she had one kid on moving in and actually had 3 by different fathers living there on and off (it was a one bedroom apartment).

I would second in Mitch and his folks. 

But I think you might be able to make a case that the first 1.5 years of QU could count even though it was pre-conversion and then pre second conversion. 

Some of my money, some financing, father is the GC (which makes the full-gut across the continent not as scary a risk as it sounds).Spent two months wondering why no one would take our money for a house, once we figured out what worked, we suddenly realized we needed to think a little bigger (was doing it all my cash, now I'm good with some leverage).I've got a nice w2 that I'd love to dump for half the salary, if I could generate it, but I'm thinking that might be many years from now.Anyways, I'm heading to Atlanta Wednesday morning through Sunday morning. 

Interesting in my 30 plus years of HML lending I have never made a loan subject to a judgement.. you as lender would be put into second position and the Judgement holder could if they wanted to do a sherrifs sale and wipe you out.. the real benefit to me is landlords pulling credit..just my experience and who I write my escrow instructions..  

I would like to put two offers in at the same time for the seller to choose one for $225k using FHA loan and another for $250k with $175k as bank loan and the seller caring $75k has a second mortgage with 60 installments of $625 zero percent and ballon of  $37,500 at the end of the 5 years. 

If you put a plan together, you will see that your second paragraph is all over the place with ideas... this is actually very dangerous in a business setting.