Don't go straight to the good and keep your money in the bank earning (losing after inflation) .2% on your investment.The Good. 

I am in the process of purchasing an REO property but have now had the closing date moved twice by the bank because of problems with the title.

Also your experiences how to convince bank to loan to a first time buyers ?

Because in my area, banks will not even consider that!

any bank can do a heloc but not any bank is comfortable with doing one as soon as you take title of property.

Find a multi-unit owner who has paid  off the property free and clear and is willing to be the bank for you. 

Also if you are funding with a bank you will have to take interest into account.How big are the houses you plan to build?

How about not having to deal with a bank for starters.

While Banks continue lending money hand-over-fist, you'll continue having this problem!

All while staying in your coop.If you go this route just make sure you check some local banks out first who gives a good LTV on the refi and have No Seasoning restrictions so you can Cash out refi immediately once the units are occupied.