I'm trying to bail someone out.

ADU on quad pushes out of the non-commercial F/F. 

If you price it out on a bad PPP (5/5/5/5/5) and have a great FICO then yes, the rate will be lower or about the same.

I’m just trying to figure out where to start in terms of figuring out what makes sense.

I would clear that out if you sell, keep a little to "stage" it.

And to top it off, the letter stated 'with capital up to $300,000' and found out from the SOW we provided to them for $65,000 in rehab fees, they were only giving us $40,000. 

There's a certain firm out there I've seen that advertises this and uses scare tactics to sell expensive estate/legal packages.

Consider reaching out to private lenders, accredited investors, or real estate crowdfunding platforms.

Deduct NEW property taxes after you buyDeduct home insurance costsDeduct maintenance percentage, typically 10%Deduct vacancy+tenant nonperformance percentage(we recommend 5% for Class A, 10% Class B, 20% Class C, good luck with Class D)Deduct whatever dollar/percentage of cashflow you wantNow, what you have left over is the amount for debt service.Enter it into a mortgage calculator, with current interest rate for an investment property, to determine your maximum mortgage amount.Divide the mortgage amount by either 75% or 80%, depending on the required down payment percentage - this is your tentative price to offer.If the property needs repairs, you'll want to deduct 110%-120% of the estimated repairs from this amount.Be sure to also research the ARV and make sure it's 10-20% higher than your tentative purchase price.As long as the ARV checks out, this is the purchase price to offer.It is probably significantly below the asking price.

This means you must always be able to rent out your properties at faster than inflation rents.