If they had the means of getting a mortgage from a bank, why wouldn't they just do that from the get go?

Beginning with rent for the month of September, please pay your rent by depositing the entire amount into the following bank account at <your bank>: account # 123; routing # 456.

@Anthony J Robinson  Hard money loan if you're looking to flip it, or a local bank / credit union (portfolio lender) if you're looking to keep as a rental. 

Problem is, you will have great trouble finding a bank that will do a FHA loan for a home that isn’t move in ready.

I would have also done the cosmetic fixes on the front end so we could enjoy while living there.

It’s in the banks interests to have conservative appraisals and the appraisers work for the banks..

Try Private Money if you can find it or call around to local smaller banks and tell them what your doing and ask what loan would be suit your needs and ask what their rates are.Also I personally thing your Vacancy, Repairs, and CapEx is low.

For the average joe, our money is deposited in the large banks.

Don’t bank on it, of course.

Having given this idea some thought, you have not provided enjoying information for me to make a sound decision.For what it’s worth, you may have equity today, but it may be non-existent tomorrow.