If you don't have appreciation capex will wipe out your cash flow. 

Many of these conversions desperately need full gut renovations.If a property hasn’t undergone a major renovation in the past 25 years, it will almost certainly become your responsibility in the near future.

You want to make sure your lender understand this as  lot do not and you will waste a lot of time if you are trying to borrow more then what you purchased the house for. 

It will teach you so much, has the best financing options, least amount of risk, and will let you know if you want to be in this business or not. 

Do you have a management company who will take over operations or is your plan to sell?

I also agree you can connect with Alan Ceshker in Austin as he's one of the attorneys that will help structure these deals. 

Is it doable - yes but you will need to go to a lender who probably uses their own funds vs. an instituational lender as they will not like 2nd position nor the low amount.

I have a cosigner willing to help, but Im unsure whether they must be in my LLC or can just be a guarantor, has anyone dealt with this before?

Also what are solid reasons/hardships I can list in my rezoning request that will get it approved?

Simply regrouting will have another crack show up in a year.