Skirting the RESPA rules is a felony and if a lender is found to be committing occupancy fraud, they could lose their business and the borrower could be fined or imprisoned or bothNot saying you're committing fraud. 

But yeah, because my house shouldn't all the sudden lose value, if the market changes, I feel like it's less risky than a normal cash out refinance

Once you lose your fear of vacancy, it is easy to deny bad applicants. 

The one downside is that population loss is a warning sign...if you are a long-term investor you could lose tens of thousands in appreciation...but you still have debt paydown and equity build...and once that 6-unit is paid off and fully occupied the number will be dreamy.I think the more important question is the strength of your team...mainly your property manager.One thing you should consider is working with housing choice voucher tenants...my city is 80,000 units short of demand right now...this trend is growing across the country quickly....a waitlist for tenants paying market rents can be a very good thing in a declining city

This will give you highest upside but there are also risks of losing capital should the stock market go down.

One has a hard deadline otherwise the buyer may lose the home and the lender may lose the ability to provide the loan.

You lose the ability to put it back with a complete demo in some areas when it is non-conforming. 

Speaking from a Contr's point of view, I would not want to install anything that a homeowner purchased. a) I lose out on the material mark-up, b) if there is a failure, you're going to call the Contr regardless, right?

If you let a unit go vacant for a month you'll be losing potential income and actual money when you have to pay the mortgage out of pocket for that month. 

((Best)) way I can think of is have some money to invest and partner with a more experienced developer who is doing what you want to do.Come in as a Jr. type partner in the deal, and work full time at it--learning.By Jr. type partner I mean you are not calling the shots, but are in on all meetings and all aspects of the project.After a few deals maybe you want to go it on your own, or maybe just keep on partnering....A good partnership is a definite strength--but it depends on the person.I would say that is the (BEST) way to learn a particular development type.If you lack meaningful money try befriending a few developers and just talk shop as well as friendship things, and see what turns up.But to be a developer you will need to have a good sized chunk of change to risk (possibly losing) to do a deal.Good Luck!