Rent-by-the-room properties can be absolute cash cows, but proper systems and management structure are crucial. 

I agree with you about how he needs to get refinanced in 3-5 years so I can cash out.

We've never used hard money or personal loans before, but do have 2 cash-flowing rentals and a primary.

What was the purchase price and how much does each property cash flow.

I can definitely tell you there's still a lot of positive cash flowing and 1% rule deals and you get amazing appreciation.

Over time capex exceeds cash flow.

These properties were not distressed quite the opposite.. but they had 100k to 3 to 5 million of standing Timber on them that if we could purchase our Timber deed we could turn those trees to cash within 90 days..PS I had created a hand made custom data base of properties  10 acres or more not corporately owned that Aerial Photogramy show Standing Timber of an Age we deemed Merchantable. 

In terms of cash reserves outside of that we don't have anything substantial saved (our savings went to the earnest money) so our priority is to pay down the HELOC and increase income.

The good, less money up front,  the bad: MIP and lower cash flow.

Cash out refinance, pay off the HELOC and then repeat like the BRRR strategy.