A traditional bank will not give a line of credit even if there is significant equity because it boils down to being able to pay back the money. 

Even if you rent at a break even or slight loss, if you could have 3 years of rental income offsetting your mortgage while realizing 3-6% appreciation, could be worth it, especially if you think appreciating for this area will exceed national averages.

This concept aims at addressing the challenges of what to do with defunct suburban malls and maybe even empty big-box retail store spaces that are in desirable and affordable neighborhoods.

Eventually, Class A property values increased to the point that even increasing rents didn't allow them to cashflow upon purchase.So, the flood of new investors switched to buying Class B properties.

I’d love to take advantage of a “traditional” mortgage (or even FHA?)

Other things to consider:HOA RESTRICTIONS: If your property is part of a homeowners’ association (HOA), check their rules, as they may prohibit or restrict ADUs even if city zoning allows them.

This is not “student housing” in the traditional sense - even the vacancy risk doesn’t exist as it’s a 12 month lease / they work over the summer there, etc.  

Quote from @Richard Bautista: Good evening and happy new year,I need input on something that seems too good to be true. 

Quote from @Iliana Herrman: Good evening.

The rents at purchase were not even 2/3 of my PITI (so crazy negative cash flow but one reason acquired below retail).