@Grady Dennis I would treat it like a BRRR but you get to drop the B and call it a GRRRR since it was gifted.

I had the privilege of interning with some real-estate rock-stars for 6 months when I was getting out of the Army and am now ready to start taking some action. 

I would guess that if you bought your home 1 year ago that your interest rate is rock bottom....so I would absolutely NOT recommend getting a cash out loan (unless there is no other option).  

I would rip off the band aid by terminating their tenancy, updating the place, and screening your own prospective tenants. 

They were located in Port Tampa City in a location that was not particularly conducive to tourism (compared to say, a beachfront property in Indian Rocks).

There are times to put a single digit yield into your portfolio based upon the raw dollar discount and based upon what you want to accomplish, but that note better be rock soIid in quality of borrower equity and borrower performance. 

It's good to read up, study on things, but truth is much like going to town in a rocking-chair, it's a whole lot of activity that doesn't move you an inch forward.

In both options the B and the first two Rs are the same -  I buy using a HELOC to fund the downpayment and rehab, a conventional mortgage to fund the purchase. 

I've been told that the average tenant is staying in a unit anywhere from 1.5 years for C class and 2-3 years in B and A class. 

@Remington Lyman is a rock star!