It depends on non-SEC 8 market rents for similar properties, the utility estimate for your property, and the tenant's income.

Also, I personally wouldnt cash out refi right now just because the interest rates are high but thats just my opinion and it really just depends on the numbers if you want to make a calculated decision. 

Depends on the lender.If it has yet to go to foreclosure and you are trying to buy it prior or at sale - the answer is a hard no. 

For instance, depending on your location insurance costs could be much much higher than indicated in the book, construction costs are a lot higher, etc. 

A phase 2 may be required depending on the outcome of the phase 1.  

Today we are economically diverse and showing job growth in several sectors.Having said that, I am not an economist (or a fortune teller) so these are just my thoughts after having gone through the Great Recession and knowing how housing-dependent we were then.Melanie

It will all depend what you feel comfortable in terms of budgeting and the type of repairs needed.

Is there strong demand for rentals and is it potentially possible to rent a room for 1500-2000 depending on the location (slightly cheaper than a studio from what I've been seeing which is how I priced my rooms in AZ)?

Also depends if you are getting appraisal and what attorney charges for creating loan docs

All depends on the interest rate on the primary home and if fixed.