I've had low returns but in general all have made money.

@Andres Felipe Alba Hernandez Yes, neighborhood covenants can sometimes restrict certain activities, including short-term rentals (STRs) or renting out parts of a home, even in areas without a Homeowners Association (HOA).

Since these are high yield DEBT deals at 60% LTV or less on commercial property it’s a RELATIVELY low risk compared to value added or new build equity participations.  

Transitioning to a Second Property with Low Money DownIf a second FHA loan is not an option, here are alternative strategies to minimize your out-of-pocket expenses:Conventional Loan with 5% Down: Once you’ve added equity to your current property, consider refinancing into a conventional loan to free up your FHA eligibility.

However, since I am NOT an expert in everything I assign a value for how confident I am in each estimate and use that to generate a LOW and HIGH estimate value.

Which is its a low cap rate deal, you might need to put 40% down in order to meet the banks DSCR loan covenant. 

But that is far from the point of this post.) first they’ll confirm your $1,000/mo “market rent” isn’t a) BS or b) still too low.

Thank you I have presented a 40-60 offer to him now to see if we can get the house at the bottom dollar we would like I for but I am putting a lot of trust in him on the price and feel that we may be offering so low that I seller will not bite 

I am familiar with the Philadelphia market and neighborhoods where units trade at or around $115K/door.For this to be a true 10.5-11% cap the monthly income should be ~$10,750.00 or roughly $1,800/unit.

Rental Demand and Rates: What is the current rental demand for ADUs in this neighborhood?