One way to increase value without doing much work is to find say a 1200 2 bedroom house and make it into a three-bedroom by adding a wall and closet.

To say a no kids and no pets business model won't work is absurd.Slot machines are nothing more than adult arcades and the hotel rooms are in most cases nothing more than glorified studio apartments.

@Dani Beit-Or Approach a 'surety' company that provides these construction related bonds and see what they say as far as bonding the lien off.

With this number in hand I can remotely estimate , say, a 1000 SqFt home would maybe need $75k in repairs @$75/SqFt for example.

My debt is about 15k and it’s hard to say a pay down date.

I’m assuming your friend is catering more to the type of business person who will be working on their computer in their room the whole time, rather than someone who is, say, a traveling nurse or blue collar worker.

You need to convey lease violations, in the same manner a boss would convey workplace violations, and in similar kind if those add up to say a 3-strikes your out, enforce. 

@Billy Linn:  it isn’t per say a feature that is missing.

They are considered a secondary market as opposed to say a bank loan which is a Primary Loan Market. 

After that, I'd like to rent the property out while also buying a home better suited for raising a family (which is to say, a bigger place in a less trendy area/suburb).I have no problem with running the numbers to see if it makes sense from investment and cashflow perspectives, but I'm not sure how the financing could work in this situation.