Rental income would be $12-14k per year, so your netting $1500-3500 the first year before lowering the interest cost over time and increased rent (rising at 8% per year).So for $0 out of pocket you get another unit, equity growth(over time), income that grows and you created a unit of housing that didn't exist before.

I normally just do new construction on these pemb, so I have never done an actual modification of an existing pemb to increase the square feet. 

are rent increases realistic?

I am an insurance broker in Colorado and can confirm that most insurance companies are increasing to minimum 8% deductibles on most condos.   

The increased depreciation deductions can offset your taxable income, including gains from the sale of the previous property.

You'll want to keep track of these because they can Increase or decrease your at-risk amount and as a result the losses you can take as a partnerYou or your CPA will need to report these on your IRS Schedule K-1s for each of the partners in LLC. ...

The shorter the prepayment term has an impact on increasing the rate.4.

@Stephen Hood your idea is solid and shows good potential, but here are a few things to consider:Private Lender Terms: Ensure the lender agrees to the 1% origination fee and $2K monthly payments—some may require a higher interest rate or balloon payment at the end.Timeline for Sale: Factor in potential delays with selling your current property or completing renovations on the new one, as these could impact your refinance timeline.Refinance Feasibility: Confirm with lenders that refinancing at $500K is realistic, especially after recent rate increases and appraisal expectations.Exit Plan: Have a backup plan in case the market shifts or repairs take longer than expected, such as extending the private loan or bridging with a HELOC.If you can lock in favorable private loan terms and stay realistic about costs and timelines, this could work well.

Instead, target sellers who have an actual problem, sincerely engage them to learn the specifics, and then solve their problem (and ideally get paid)!

Instead of increasing rent, I would look at having the security deposit increased to protect against wear and tear.