And we are flirting with exactly that, we see it playing out in actions.

How do i make that third unit a legitimate one??

60-70% LTVBorrower has a legitimate exit strategyCredit above 680Monies to pay the loan12% + 2 points. 

It's your agent's job to play nice with others while also keeping your best interest top of mind.

This way the investor has a quality property where all the payment is going to the mortgage so equity builds up fast and they can take the re-advanced funds and WAIT for the right opportunity for extra yield plays. 

If its college students/young professionals @Nathan Gesner gave some solid idea.If there are a lot of tenants with young kids, maybe a safe play areaAll depends who lives there

Some real estate agents think because the funds show more they can play tougher, but I always let them know the funds in there are for specific deals with this one being priced where my bid is.

and how will the $500k exemption play into it? 

Or is it mostly just a play to decrease volatility in booking rates? 

MTR is our play there.Vegas can definitely be a tight market for flipping, with competition driving up prices and squeezing margins.