I love this architects designs for cottages and pocket neighborhoods, but this concept is something entirely different.

Yep, we are in a similar situation.

In my experience, the local banks are going to get you better rates and lower fees with their commercial loan products than the "DSCR lenders".

For those still wondering why mortgage interest hasn’t moved down alongside the Fed’s rate cuts, see this WSJ article: If the Fed Is Cutting Rates, Why Aren’t Mortgage Rates Falling?

The policy was $2200/year ($1.1M Bldg coverage and $1M Business liability coverage in this apartment LLC) and I haven't had a single claim in my past 5 year history.

You might find it useful to attend a meetup or two just to learn how other folks got their start into the industry :) I host a small/intimate meetup once a month in LIC, check it out here: https://www.biggerpockets.com/forums/521/topics/1214850-meet...

Do you think this would be feasible in Phoenix and if so, which areas?

If you're comfortable living where you are, equity in your current property or your savings rate would be the two other ways to get your next one which is going to be much slower.

You're never going to be 3% financing and if it cash flows, I would lean toward keeping it.

In this economic environment, creativity rules.