Fortunately, the tenant paid for all of it.They lived in a building with a nice laundry facility (six washers and dryers) that were priced below what the laundromats charge.

I have already shopped insurance, and the sellers are providing $5k towards prepaids/closing costs. 

But basically with a construction loan you will need to have considerable cash involved - most costs need to be paid for and then the bank will reimburse at certain checkpoints.You may want to start with some smaller value adds inside the existing house to maximize rent from the house hack. 

@Mike Richards You can deduct real estate taxes in the year they are paid, not when they are due.

@Heather McNicol I’ve paid for 2 mentorship courses thinking they’d help me get to the next level only to realize I’d wasted my money on both of them to the tune of about $12,000 all told that I could have used as a partial down payment on my next property.

These sellers paid much less than what the going rate it today, likely have no mortgage or low interest rate mortgage and do not need to push rents to market value to cash flow.They get solid returns at their current rental values, have minimal headache with current tenants and they don't need to do major repairs to get their properties sold for a solid value. 

We paid $1.775 million for the notes, worked out a modification with the borrower, and received the first 5 monthly payments relatively on time.  

I hope you haven’t paid them any money.

Same as you'd screen anyone else with very close attention paid to which parents you select to guarantee the lease.Are there any specific clauses I should include in a room-by-room lease for a shared living space?

I think he calls it "pre-development" & goes over subdividing, entitlements, permits, etc.