For example each property may only be worth $200,000 and 10 of these properties are collateral for one $800,000 loan, while each property would be upside down and seem to be over encumbered but combined they are only at 40% LTV....

Not a good combination.

Yes I am aware that rates can fluctuate and many people say only to use this for short term but I also know lots of people who have used this strategy for long term with success, just slightly riskier I guess.Option two: Get a cash out refi on my primary house which I could get somewhere between 120k-140k and use this money to fund the downpayment and other associated costs.Option three: Use a combination of either option one or option two PLUS pull some money out of my 401k to aid in a larger downpayment.

It is difficult to combine IRA funds of different tax types such as SEP and Roth, however.New construction for immediate sale is a business.  

@Nando Gapasin:CapEx and Repairs are low. 15% combined is safe.Taxes and insurance look very low...very, very low.

My partner is the no bs kinda guy, so I think that scared the crap out of them.

I have 3 rental properties with approximately 100-115K of equity combined.

If you have those terms from the get-go, there's really no need to refinance unless there's a crap ton of equity in there that you pull and use on other deals.

However, on our $65,950 combined down payment and out of pocket capital improvements we made a 1.5x multiple on our invested capital.

You can even combine that with life insurance policies held by the company to facilitate buy-outs.