Does your customer think you barely meet their expectation?

Ask your current bank if they have a participating bank partner who will do Consruction loans.2. 

There are lenders who even if you haven't filed your taxes can use the income to offset your PITI, which should barely raise your DTI, especially in the type of example that you mentioned. 

When you have a big cost segregation depreciation plus your big startup expenses such as furniture and supplies, and you then have a big tax deduction against your big W-2 income because your passive losses are no longer limited with your big material participation, it increases your audit risk a ton.

., you might be cutting it way too close to really do anything. 15k is the bare minimum I suggest for reserves or oh no money on any project so that doesn't leave you a ton left to work with.As @Glenn Banks said, 203k is probably your best option because it's an FHA loan and you can do low money down and the reno is baked in, but the reno is complicated.

Last year I barely made any money after all expenses were paid.

At the bare minimum, you should do the following to make your bookkeeping easier:1.

Any real estate ventures would be things I consider fun where I can participate in some fashion without doing the bulk of the work and I would derive some autonomy, mastery, and purpose goals from.  

-It's difficult to cash flow because the current rent barely covers what the mortgage would be. 

There is no right answer of course, just wondering how today’s participants in real estate view this transaction.