The FHA loan allows for a lower down payment, which is a fantastic advantage!

I've been in real estate for the past 7 years, and I got my start like so many other investors through reading Rich Dad, Poor Dad. 

He rightly points out the true material costs when accounting for all of the smaller misc. items add up and is usually under represented in construction budgets by new investors.

Not one of the detractors in this thread has gone through the entire course. 

@Amy KonopkaImpossible to give you an accurate answer without reviewing your tax return, so this reply is based on assumptions picked from your description.If your only taxable income comes from this Schedule C, I do not know how you would qualify for any loan anyway, even with a ~$20k profit after adding back depreciation.

Expense ratio, as others have stated, often ends up evening out these fluctuations in each expense and can often times be a more accurate predictor over many data points.

In the past year we've been through the ringer financially due to bad contractors, deal promises, and generally just being new to the game.

A prudent investor doesn't seek quick riches through shortcuts.

Welcome to the community, Nish. 

It sounds like their house is in ok shape, but not up to the others in the area.