This "cash" is in the form of LOCs, perceived equity, and in exceedingly rare circumstances, actual reserves. 

This varies and by no means is a hard and fast rule but if you are basing you investment strategy on the perceived added value of the ADU, this is a very risky endeavor.

I understand where @Matt M. is coming from on the contractor perspective, and I don't even mind if work is backed up or its waiting on parts, my issue is the perceived lack of attention.

With several months of price rises, one would believe that there is certainly “momentum,” but Shiller believes there are other factors that could negatively influence this perceived momentum.One factor, Shiller points out, is the large number of homes in foreclosure or about to be in foreclosure.

The issue is they perceive wealth comes in the front door and flows through the back.

Others might want a higher return given their perceived risk of my target areas, it's a personal choice.As to the number of properties, why do you care?

The numbers always look good on paper.Then you analyze and find out the numbers are off.Now what is left is finance options with the real numbers and if the seller is realistic or not.A four plex has it's own issues.Buying a larger complex can be okay for your first one if you purchase correctly.If purchased wrongly it can take down your other positive investments just to keep it afloat.5 units up to about 20 units someone can self manage but it gets really hard.Larger size properties it's easier to have a full time PM company in place where that's all they do.If you are buying in a less desirable part of town for more cash flow usually the more intense management and unit turnover rate will eat into the perceived extra cash flow gains.Nicer areas with better demographics will have more lenders lining up to give you great loan terms over suspect areas which present more risk of the area going really bad for the lender.If an area tilts from okay to bad now the lender is taking on a foreclosure for a huge loss on the loan.

While I didn't read the entire article, I imagine that whatever was ultimately proposed as an optimal bidding strategy was the same as following Nash equilibrium, another concept you might want to familiarize yourself with from game theory.Now, the problem with using Nash equilibrium -- or any other optimal bidding strategy -- in a real estate auction is that the item being purchased doesn't necessary have a commonly agreed discreet value (what the article calls a "common value model").Instead, the participants in a real estate auction may have very different perceived values of the properties up for sale, depending on what their exit strategy for the property is.

That might be true but then just like with a development deal you have to look at the cost,perceived benefit,and time to complete.Doesn't certain parts of New York have rent control where you are capped on your returns anyways in some areas??

They perceive flipping deals as riskier than owner occupied deals, and therefore are less likely to want to be involved.