The only folks that would encourage this strategy would be a lender with something to sell or someone that is not an operator that had to scrap and stress his/her way to success like most of us.

Hi guys, so if i use my business credit cards with a liquidator to turn credit card into cash and i use that money to invest with, when i go to make payments to pay back my credit cards is that money i use to repay the cards taxable???

Her sister has agreed to us paying out her portion of the equity and having us use this as a rental. 

Here in Florida, our most common contract states:"Buyer will pay cash for the purchase of the Property at Closing.

In other words the subject property owner's tenants benefit from that property that subject property's owner does not own (and thus pay more in rent, vacancies will be easier to fill, etc).

Matthew,Yes, you would want to use those funds and do a 1031 exchange to avoid paying taxes on the cash or (boot) from the sale of the home. 

Negatives are that there is an additional cost for me and if the tenant doesn't pay the water bill, i would end up with a potentially large bill at some point. 

Your monthly mortgage will be about 2,000, which won't pay the bills as a long term rental.

If you approach this business with the mind set of stealing the seller's equity - you are not going to be successful - remember you are dealing with folks who have a serious problem - show some empathy first and you will win in the end.

My understanding is that it is me paying out of pocket what the previous owner has put into the house.