Quote from @Briley Roe:  yes those fees are very high as you have a broker fee and other fees for a loan little over $100k at 6+ points. 

Looking to construct a duplex at a reasonable cost but also quality for long term durability.Thank you!

high interest rates have hurt cash flow and long term rentals are still a great investment... they're just not going to throw off rental income in the first few years of ownership.

Some good advice above- it really depends on their "need" for the cash.They could always turn it in to an investment property and eventually do a 1031, leaving a legacy for their kids some day. 

If you haven’t already, I’d scope out the municipalities around town.. from what I read in The Economist, the Phoenix metropo area continues to rank high for job growth, which usually bodes well for new builds.

You still claim the income as miscellaneous income and deduct property taxes and mortgage interest (subject to SALT and other high mortgage limitations) on your Schedule A, but that's it.2. 

The rate will also be high. 

I'm particularly interested in what tactics people have implemented for sourcing quality deals (not the I need 100% financing bs)Would you:1.

Traditional deals often don’t excite investors—offering $200/month in cash flow isn’t very compelling.But with co-living, you can offer 5X the returns, making it much easier to secure funding.Now, instead of asking an investor to put up a 20% down payment for $200/month cash flow, you can pitch them a 5% down investment yielding $1,000+/month—a much more attractive deal.Why Co-Living is the FutureCo-living isn’t just another strategy—it’s a high-demand, high-cash-flow, lower-risk investment model that aligns with today’s rental market trends.

This is a good opportunity in a strong market, and with your excellent credit and HELOC funds, you’re in a great position to make this project happen.