My suggestion is to purchase the house for $200,000 which would give them money to pay off their credit debt and would leave me with $100,000 in equity. 

At the time they were pushing a Turnkey-Alternative approach( you buy the property, pay them to rehab and you end up with some built in equity). 

Hi LuAnn,You would only use a hard money lender if you were buying a property with large upside in equity gain through a value add.  

here are the numbers:  Comp just sold in early Feb for $205K - after renovation I assume $215K, which leaves us with about $103K in equity. 

Harb The question comes down to do you have them time, resources and skills to do everything from out of state and whether you can truly have built in equity by doing it yourself.

I currently have around $450-500k in equity.

Lot's of owners have had a run up in equity getting little returns for cash flow.

The risk during a downturn is not just the loss in equity but the loss in ability to service your mortgage loans and operating expenses on the property.

Even though I have $50k in equity cash out loans typically only provide 70% LTV so refinancing with one will not give me much of my $50k and will just increase costs with closing and interest rate increases. 

We're cashing out $300k in equity and our monthly payment dropped by about $200.