Request the tenants leave, flip to 3 bedroom, and rent to new tenants at $986If I convert from  2 BR to a 3 BR, I've calculated a payback period of 2.3 years... here's the high-level of how I came to that number:Annual Opportunity Cost:3 BR vs 2 BR Rent = $2,790My Time (expect less needy tenants) = $1,183TOTAL OPPT COST= $3,973 <-- This is a favorable numberCost to get unit ready as 3 BRTotal to flip = $7,551 (includes paint, new floors, converting basement to bedroom, etc)  2 Months lost rent = $1,510 TOTAL UPFRONT COSTS $9,061 <-- This is an unfavorable numberPayback Period =  $9,061 / $3,973 = 2.3 years (Note if I'm conservative in my nubers, this becomes 3 years)Couple more things to note, they're set up on re-occurring payments and have not missed a payment.

There's a very small sample size for comparable apartments on zillow/craigslist/realtor.com and I was wondering if anyone has any strategies they've used to calculate accurate/conservative rent prices for specific neighborhoods?

The best thing is to buy into house appreciation when you see it coming as a massive wave while ensuring that you can surf the wave on your board.For some, that means been cash flow positive going to the deal (safer and conservative approach)For other, it is acknowledging that you would be out of pocket every month until you sell the asset, which is OK... but that is not a scalable strategy

If he doesn't have experience in this type of properties, it might be hard to get financing as it does not quality for conventional financing and business lenders are usually looking to start slow and conservative with new account relationships.  

Hypothetical deets (all numbers are rounded):30-yr Mortgage: $280k @ 4.8% Dual net monthly income: $9kTotal monthly expenses: $5k (includes mortgage payment)(Cash Flow: $4k)Plan is to use a Line of Credit (18% APR) and pump $15k into the mortgage every 6 months (conservatively paid off in month 4).Using this approach (per the amortization schedule calculator I have) I will pay off the mortgage in less than 7 years.I will pay around $11k in Credit Line interest (approx. $700 each 6-month iteration), but will reduce my mortgage interest by over $200k!

If that's what they claim to be conservative I would caution you to review all their other numbers carefully.

If you want to use a conservative strategy, paying off your principal is not a bad idea.

Stick to your conservative investment strategy, build up your dry powder and aggressively invest during the inevitable downturn (when that happens, I don't know...lol).

@Aaron Howell  I must be plugging in numbers that are way to conservative.  

If so, it's all good but that's not what I was told by my lawyer (not my friend) who represents probably 50% (conservatively) of all the landlords along the front range.