The success of such investments depends heavily on local market conditions, and maintenance and upkeep costs can add up, especially as the property ages.

However, you make a great point about starting local and dodging PM costs to start...

The cost of labor , materials , property taxes , inflation , interest rates  etc .

For residential multifamily properties (1 - 4 units), can you use a home warranty to take care of the repair costs associated with rentals?

Others may argue that higher rates are bad as it drives up their borrowing costs. 

If a person has RCV or ACV policy makes a huge difference, than question of what coverage level people had and if they had policy add-on's that cover cost over-runs and all that fun stuff, not to mention contents. 

* The conversion would be costly. 

However, I still struggle to understand the art of estimating rehab costs. 

This puts the home underwater.I've calculated the following two options: To sell the house, it would cost me about $60,000out of pocket.

Risks: rates go down and you have to pay a prepay of 2 or 3 %; you have to sell and pay the prepay; rents decline & you can't make the payment like any other type of loan; cost upfront a little more than conventional; need to find experienced broker licensed in the state where subject property sits; servicers are bulldogs.