@Greg R. is right, you have to figure out your risk tolerance.

Hey @Felix Shi, your decision really should be based on your risk tolerance and goals.

Don't get involved - just don't tolerate it either. 

It's worth noting that these strategies are not mutually exclusive, and some investors may incorporate elements of both, depending on their financial goals and risk tolerance.

Just evaluate one property at a time and decide if it makes sense given your market, risk tolerance, future plans, etc.One point you might be overlooking (not sure if it was covered in the podcast) is that for those us of using Fannie's delayed financing exception rule, the CO-refi amount is limited to whatever the initial investment was, which should be well below 75% of the appraised value presuming low acquisition cost and successful rehab. 

I would say this is a topic for their financial adviser-  their liquidity, cash flow and growth needs as well as their risk tolerance should all come into play here. 

If they can tolerate the risk, perhaps a small % paid quarterly or a lump sum when the property is sold.

@Brent Coombs It really depends on your risk tolerance and financial goals.

By choice, most renters do not want to live in Bothell, Renton or Mill Creek and commute to Amazon or Google or MSFT, unless they have no other choice (limited by price, etc).Another thing I have noticed is that home buyers have greater tolerance as to what locations they can accept compare to renters. 

They are blight.If it is illegal in an area, then your examples are no better tolerated.