Take into consideration the mortgage, taxes, insurance, HOA fees, and cash reserves for home repairs or replacements.

Those factors don't even take into consideration the cost to prep a unit at turnover and possible placement fees paid to an agent to find a replacement tenant.

If you value the friendship and are willing to consider him as an applicant, I would just have him apply as any other person would and treat them with equal consideration as you would for a stranger about the property.

On top of that the tall ceiling height on the 1st floor presented a great open floor plan concept.

However, that requires us to dig down the basement floor to meet the ceiling height requirement (it's got the egresses and 2 exits already), and I think that can easily cost us $100-120k.

If you time this well, and develop mid-late Recovery phase, your projects should be coming online right at the height of the demand depending on the market.

This chart basically shows me which City's are most desirable (can do the same with Zip Codes):Anything to the right of 0 means the $/sf is growing QoQ on average, and the height is the current $/sf of that market.

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I understand doing an initial BRRRR on a low cost property so my subsequent information is something to ponder possibly only for future consideration.  

This is very relevant in my considerations!