One of my buddies did something similar, bought a place with a walkout basement, and converted it into a separate rental unit.. now his tenants cover most of his mortgage.

Was the property completely renovated or will it need new roof and windows and HVAC system in 3 years?

We will be getting it hopefully getting it for a steal (around 950,000 ) in class A neighborhood but its worth around 1.2 million.It needs extensive work before I consider it livable.This is my first time buying a property and need some advise.This property has potential to be valued at 1.4-1.6 mil after remodeling and even more as there is potential to add 2 ADUs to the back.We estimated around 175,000 of work needs to be done ( full remodel kitchen and guest bathroom) new floors, windows, repiping and rewiring etc. 

Ultimately, you want a good amount of properties to convert to leads by nurturing and creating relationships with the owners, being the ones to solve their problems, or offering them the best price possible.

The other watchout is if you lose your job you are required to pay the money back quickly, like 30-90 days with most 401K's or the loan gets converted to a withdrawal that comes with tax implications and penalties. 

So you may actually be able to make more money with much less effort if you did convert this to a long term rental.I am very active in the market here in helping people from out of state buy and sell condos.

@Frankie Lotrec if you have an existing loan on the property and you plan to legally convert from a 4 unit to 5 unit , you should check the loan documents because you’d essentially be converting it to a commercial property, since 5+ units is considered commercial and subject to different appraisal approaches and so it would rule out the property being considered for purchasers utilizing residential financing.  

Converted garage into more living space.

It needed maybe $20,000 initially for a roof and windows.

In some areas, we board up the 1st floor windows until we are about to start marketing the property.