Leverage magnifies return. 3) The effort involved in adding an ADU is comparable or larger than a rehab associated with a BRRRR.

The net cost of the turns is what really matters to your return on investment.  

Those types of properties can bring in good returns, but the management can be intensive, and finding reliable tenants for both residential and commercial spaces might take some work.

(Foundation, etc)4) Black mold, asbestos, lead paint, other other costly repairs. 5) It need significant cosmetic repairs where the purchase price just isn't worth it. 6) They may have an odd layout of the rooms. 7) Non-compliant septic.8) Trouble with permits or tenants9) Listing agent has a poor or incorrect listing.

Sometimes an $800k 4-unit could be a better return than a $300k 2-unit...or visa versa. 

@Kyle Carter just because a building has all section 8 tenants doesn’t necessarily mean that the cap rate will be higher on exit but it might attract a buyer(s) that are focused cashflow and not appreciation; therefore a lower price to juice the yield.One of my non negotiables if I were you would be to only buy in an area that is desirable.  

Generally speaking, if you borrow money at 7% interest and your investment is earning a 10% return, 10% - 7% = 3% and you are not growing faster than inflation.

I would lean towards recommending that you pursue the deal - plus having the property remain in your family may be a net positive for you and your extended family regardless of the ultimate financial return. 

That said, I've seen many of these carriers are pulling away from habitation exposures (non-renewing a good portion of that business).  

@Rud Sev Preferred returns for use of capital in a syndication are typically taxed as interest, not as a return of capital.