(B) One detached, new construction, accessory dwelling unit that does not exceed four-foot side and rear yard setbacks for a lot with a proposed or existing single-family dwelling.

4.5% is low, for that cap rate you would want this to be in the absolute best of areas, and even then in many parts of the country that is not enough meat on the bone.

If you have a proof of concept and there is enough meat on the bone this could work although that would be very generous of you to exchange equity for working capital if they are not bringing anything else to the table.

When one buys a high priced distressed property, fixes and flips, there isn't much meat left on the bone. 

@Robert Burris Not enough meat on the bone for me.

.- Check window trim for wood rot (I have a constant bone to pick with window replacement companies that offer window wrapping for older homes, completely hiding existing trim as it degrades further and lets in more cold air!)

So there will have to be some friendliness/cooperation between the tenants upstairs and downstairs.The whole house needs to be fixed up, but in general the house has good bones and the garage conversion was pretty well done.I see a lot of benefits from splitting into 2 units as opposed to renting the whole house out.  

Sellers are just looking for prices that we just don't see enough meat on the bone.

It is in decent condition and has good bones but it's priced similar to properties that need a gut reno or are tear downs.

Home is block and has good bones and more sq feet than most 2/2 due to the addition of a bonus room.