Many even include a set monthly amount.

Good call, Noel—licensing and insurance are critical, but in Tennessee, a contractor’s license is generally required for projects totaling $25,000 or more, including labor and materials (See Tennessee's licensing requirements).

For me, in the LTR game, it's tenants. 

Focus on what the rents will look like post-renovation with 4 units instead of 2, and have a clear game plan for refinancing to pull your capital back out. 

Federal ProtectionsFederal protections against predatory lending begin with a veritable alphabet soup of legislation, including TILA, HOEPA and RESPA.13. https://www.lexology.com/library/detail.aspx?

There are rules and situations unique to each state and that is why you want to go with a local lender vice someone just reaching out to you telling you they can do it. 2) Better recourse if the lender screws something up: a local lender has more skin in the game so to speak as if they screw something up their name will be mud to local real estate agents in the deal.

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 $9k/$72500=12.4% Rate of return (not including any closing costs which would reduce this return).  

However, does that include people who wouldn’t qualify?

Make sure you know the impact that adding an ADU will have on any rent control. 12) investors seldom include the land value in the overall ADU costs.