I guess I never thought to be specific enough to tell him to replace it running the same (proper) direction. 

After listening to a few podcasts, reading, talking to carpenters, R/E agents etc.  

For example, when I turn around a rental properly and rent it out, the market tells me if I outcompete other rentals every time.

Things I learned:If its not in writing, it never happened (seriously) If you need tenants out, do not wait start the (PROPER) eviction proceedingsIf you have a short sale, be aware of the timing and (Re-appraisals) If the town asks for it (provide it) believe it or not the townships, city and local ordinances are on your side!!

As to a RMLO, they are not really in a position to underwrite or even originate options, they may originate a note and under a properly licensed mortgage banker or brokerage allowed to originate high cost mortgages......and those will be hard to find who are compliant doing an equity funded note, like finding hen's teeth.

However, if you are investing in a less desirable area ensure that you take proper precautions to prevent theft.  

Is this in your opinion not proper advice?

@Max James I actually like properties with mold issues, because they can get you a discount on the price... but I say that with the caveat that I firmly believe in proper mold remediation, and NO shortcuts (such washing things down with bleach, or painting over problems).

The problem is that the REI is going to be limited in both the number of refinances they can have at one time, and the total number of dollars they can have in loans at one time...and usually, the number of dollars is the bigger of the problems.The solution is credit partners, but the deal must have enough juice in it to satisfy all involved.  

A great, quick read to do this is The E-Myth Revisited.