Will a bank usually give a conventional mortgage on rental properties and if so should this be the route we are looking is to take loans out individually between the 3 of us?

The only thing you will save on is the payroll taxes, and not income tax if you did go the S-Corp route. 

I will check back in here, curious to see what route you go. 

Hey @Steven Route, have you considered doing the same project but renting the unit out long term or seasonally?

Sit down with them and go over all your facts and plans for the future and let them guide you on the best route to take.

You could invest in those individuals in a syndication, and that would be a better route but still second to operating hands-on locally IMO ... that would be more equivalent of buying stock in Micky-Ds though ...

Has anyone on this forum gone this route before? 

Option one is likely the best route to take and the one I was going to suggest.

Your best route is have seller deliver vacant if possible, otherwise have the seller put good amount of money in escrow at the time of the closing and seller will get his/her money back when tenants leave.

Something to consider if you go this route instead of a fixed-rate mortgage.