You might also consider talking with different lenders and seeing which lenders will do a 401(k) loan that combines and FHA loan with the cost to rehab built into the loan. let me know if you have any questions, I am in Utah, and I’m trying to do the same thing but the only thing that’s stopping me is my credit score and financing the down payment.

You could do this again and again, rolling that small multifamily into larger and larger apartment buildings.From the stories I’ve heard about HELOCs, you could potentially wrap up all your properties under a single umbrella and borrow against the combined equity of all of them. 

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.