I've had guys look at an obvious flaw in their work and not see it as I pointed it out - still wanting to be paid of course.Amazing how much time and energy it takes to oversee and manage all this as we are growing. 

In addition to moving rents to market and operating the property more efficiently, we uncovered an opportunity to build out 4 additional units.

The walls are in pretty good condition and only have a couple of minor cracks and typical flaws you would see in a home built in the 60's.

In law has separate entrance only common areas shared, large backyard, recently remolded very nice, granite countertops, laminate flooring, stainless steel appliances, large master with bath, convenient location...The flaws... 3 bedrooms but one is really small only fitting a twin bed, It is on a very busy street, is in a C class area but borders an A class area, in law that I stay in is attached and carport fits cars only in a single line...I have also been considering just hiring an agent to fill the vacancy and then self manage..

Well it took you several months for you to uncover the issue....how was it then supposed to be discovered in a couple hour time frame from the inspector?

With supply being in the red across the Austin-Round Rock MSA, supply in peripheral cities is being uncovered and made available to purchase. 

Maybe not as much of a flaw as it is a concern.

You'll need to consider setbacks, covered vs uncovered ground (how much asphalt / concrete / building can exist), zoning (does the area allow multi-family or do you need a variance) population density requirements, building height requirements, and any other fun things that the town regulates. 

That may uncover any recent claims. 

Here is my plan, let me know if my logic is flawed or if I am missing an important component:- Make an offer of 70% of ARV minus construction costs. - Convince the seller to agree to a 6 months owner carry (lenders require a 6 months "seasoning" before I can refi) - perform rehab, get tenants in place and get the place cash flowing- After 6 months refi. bank orders the appraisal.- I would provide income data and before-after pictures to convince the appraiser of the forced appreciation. - With the increased value I use the %30 equity as the "down payment" and wrap fees into the loan. - Pay Seller financing note off- If there is enough meat in the deal I would pull equity out to finance the next rehab.- Rinse and repeat for the next deal.