I don't think that method qualifies for Fannie/Freddie loans, so I'd have to find a portfolio lender who is not looking to sell the loan.

This is the method Sean Terry preaches as a good way to build a team.

's method and taking out a HELOC on this house?

If you acquire a 3-4 unit property and there are tenants there already, what is the best legal method you have done to remove them so you can pick your own tenants base on your screening methods. 

  :)  SOME (not all) may frown on this method.

I used the strong letter method because 2 days before closing a new loan on my building, (that was in foreclosure and receivership..not my doing, partner problems) the bank changed their mind on making the loan!  

Lots of good info in this threadhttp://www.biggerpockets.com/forums/311/topics/125040-how-do-you-scale-your-business-so-quickI have went from 4 units to 42 units in about 3.5 years using the land-contract purchase/small bank refi method.

You're clearly at an early stage to this process where it may be best to talk with an architect, they'll be able to consult with you about feasibility, code restrictions, permits, space planning, construction methods etc.

I've helped 7 people (including myself) establish 700+ scores using this method.

In addition the steady passive income from a tax method is easier to pass the income with lower tax measure.