When all factors  are considered in totality, the applicant's 2.7 income factor may be a "safe" risk, but if the other factors indicate a problem with this applicant's qualifications, he may prove to be riskier than you should permit.

Quote from @Robert Ellis: new builds set the price premium in every zip code I've ever studied. in addition new builds don't take 9 months. we just built a house in 60 days. we wait till permits are approved and shovel ready, investors buy land cash, entitle, contracts, negotiate with financing, place financing when we are ready and break ground. but we build the same over and over and don't go outside our Floorplans 60 days from Dig date maybe.

As @Bill Brandt mentions it's probably a bad idea to permit Great Danes in a 500 foot walkup apartment, so adjust as appropriate.

What is the practical process for getting permits for rehab properties?

These are usually legal for an owner to live in (as long as the bathroom is permitted).

She pulled permits and lives there full time now!

You can increase the rent by whatever amount is otherwise permitted by law.

If you are going to engage an architect and do full plans and permits, then you will likely need to do some pretty serious analysis.

Many lenders will require seasoning (ownership interest) for a minimum of 6-12 months to utilize a new appraised value, but many will permit a cash out refinance using the purchase price anytime after closing.

If you take over the company that has good cashflow that's a good indicator but it would be good to vet those properties out by making sure they have the appropriate permits to operate legally.