So you can afford to be risky.  

But I agree the risk is there and I could be flagged as a shady borrower so for this one I should just go elsewhere and use them for portfolio loans on my rentals.

Not only that, but I had family and friends holding me back because they didn't believe in investing in Real Estate because it was "too risky" and "too hard to make money."

Some might say this is a little risky but I looked at all of our exit strategies and liked the prospects of working the deal out.

And it was a no lose proposition for us.

I am unsure of hard money costs on something this large and risky. 

Local hybrid private lender terms I've seen can go as low as 20% or 25% down payment and as low as 8 or 9 percent interest rate, and the better terms are given to those with better credit and doing less risky projects.Good luck with your investing!  

This exposes me to potential higher vacancy, so thinking of ways I might mitigate the risk! I

If I plan to use an experienced management company for my rentals (as my husband and I plan to continue full time work), do you think it is risky to invest in less expensive markets in multiple states? 

As far as the appraiser, I am buying houses below market value, so I agree counting on the appraisal is risky, but my agent and I are being VERY conservative in the ARV's.