This approach is not fail-proof, obviously and the manager needs to have enough experience to know what they are doing and how they are going to execute the business plan.In the example above, If I'm confident I can spend $10k per unit (rehab), then rent each unit at $1,000 in a reasonable time , then I wouldn't have a problem paying $1,000,000  for the asset.

I used a residential loan once from my 401k for a remodel project on my house but I never had to show proof of what I used it for.

Here's there requirementsDTI (Debt to income) ratio under 40%20% down + closing costsStable, reliable W2 job, or proof of self employed incomeYour credit score mainly dictates your interest rate. 

some of us have no option but to buy one good 3-4 unit deal, fix up, force appreciation increase value and 6-12 months later refi to bank roll next bigger property. rinse and repeat dti ratio does increase but ratio should be less than the noi increases or not "good" deal. banker will ensure your still under 43% on backend to protect the asset and risks. if want ensure that bring proof new signed leases by tenants if buying occupied. now done both. commercial is less restrictive overall less federal hand holding seemed faster.  

Then if the question ever comes up in the future of use you have direct proof.

It is a good idea to keep copies of the proof of insurance from all contractors who did work on a project in case an issue arises later.

Agree to fixed price and have them send you receipt as proof it was done.Wouldn't go much farther than that because you'll magically have a tenant who's offering to provide the work for problems that come up each and every month.

Furthermore, this would allow me to more easily provide a proof of funds.

MAKE all your tenants get renters insurance and provide you proof as a 1st line of defense.

ive done some of the work myself, and I've traded labor with a few contractors that i have really good relationships with. we added nice life proof flooring, quartz countertops, extended the kitchen, backsplash kitchen, a nice modern-looking horizontal fence What was the outcome?