I will be moving soon, and would like to purchase a house since it is highly likely that I will be living in this area for a minimum of 2 years, and likely 6-9 (Or beyond).  Due to this semi-permanence, it would be much preferred to dump my rent money into equity in real property if at all possible, and get a few others to do the same for me.

My thought right now is to purchase a house that is listed at $199,000 due to its location, style, etc., I could definitely see myself living in it through the remainder of school. This will put my monthly mortgage payment (Not to include taxes/insurance/PMI) at approximately $1050. The house's upstairs consists of a bedroom, bathroom, and second seating area/office, so I would like to take that for myself so I have my own space as well as room to study. Then the main floor consists of the kitchen, two more bedrooms, a bath, dining room and living room. I plan to rent out those two rooms one to a friend for approximately $400, and the other at market rate, which is going to be around 500-600 more than likely.

The basement has its own access as well as a wet bar.  I would like to turn this initially into short term rental area by placing a door on the stairs that can be locked from the top side, and converting the bar to a kitchenette.   The exterior access will need a digital lock pad placed on it so that the code can be changed after the rentals, etc.  This space looks like it could fetch between $600-$900 a month using limited data sources from a less desirable neighborhood.  (This location is nearby a major expo center).

Finally, more long term: the garage.  There is a two car detached garage that has potential for an accessory dwelling unit to be built on top of it.  As a personal preference, I would like to keep the garage if at all possible, but I am not above merely converting the garage itself into an accessory apartment for more long term rental potential.  This could fetch $700-$900/month as well based on preliminary assessments.   

Some things to overcome:

1.) Qualifying for the loan: I used some basic calculations to come up with how much I could qualify for and the max was 215,000. This was based on a gross income and a DTI of no more than 43% on a 30 year term with interest rates between 4.0-4.15 (My credit is currently excellent, and I intend to borrow from a bank at this point unless a better option reveals itself). However, I am still concerned about my ability to find a lender willing to go this high.

2.) Doubt: this will be my first purchase/investment like this, and it is- as many of you I am sure know- terrifying.  While the numbers more than make sense, my concern is the ability to bring these numbers in, and what happens if I for some reason can't.

3.) Finding funding for the accessory dwelling unit over the apartment: My current thought is to look into a FHA 203k loan, and whether or not it could be used for the improvements I listed (As well as redoing a fireplace), and the apartment over the garage. If this can't be done- are there any other options to secure funding for this type of improvement? Looking at it from a cash flow perspective, it would make sense and provide some more security as I am somewhat leery to rely on ABNB rental of the basement. Also, this is going to be additional permits and dealing with contractors that I am entirely new to. Any advice would be extremely helpful.

The monthly payment: -$955

Insurance: -$85

PMI: -$48

(EDIT) Forgot Taxes: -$185

2 Roommates: $900

ABnB potential: $700

Potential garage apartment: $700

Net income potential: ~$900

The cost of permitting/construction of the garage apartment is a huge unknown at this point.  Would anyone have any suggestions on a ballpark estimate in making this decision?  The structure can be no more than 650 sqft per city code.  Is there a recommendation you would have about determining this cost? 

Everyone, thanks for reading!  I look forward to any suggestions, modifications, and constructive criticism.  

 Mods, if this is the wrong place- please feel free to move it.  I wasn't sure if this should go here or the, "Starting out", forum.