There are tons of threads here on BiggerPockets where you have a new investor bashing a property manager, seller or turnkey guy and then when the experienced investors chime in it becomes very clear that the new investor wasn't telling the whole story and there typically wasn't any wrongdoing by the property manager, seller, turnkey guy or what have you.

Yes, but the 3rd option is I pay the remaining seller note principle in cash via my own savings/lines of credit. 

If the rent stabilizes, I can then consider refinancing these properties using DSCR or other valid options (please educate me, and let me know what other options you think are valid).

I have two options.

In addition to conventional loans and FHA loans, if either you or your wife are veterans, the VA also has a rehab program.I'd be happy to discuss my rehab experience both as an investor and as a mortgage broker, and at least help you think through your options. 

The original post leaves the door open for a challenge by the IRS, so the safe harbor of holding it for investment for two full years is the safer option.  

Offer aid and housing options if you're able -- don't try to profit. 

if so does anyone know how much is the typically LTV you can takeout?   

Has anybody found a workaround for this or would the seller simply have to hold the note long-term without the option of selling it?

HUD targets average rents for an area, so just like average school grades, this typically translates to Class C property rents.In our Metro Detroit market, the MAJORITY of the claims about getting higher than market rents can be traced to a Class D Neighborhood/Property.