@Blaine Cox It CAN work, but its largely based on geography and how shrewd of a negotiator you are, it sounds like in the example above you needed a lower purchase price or a way to decrease the rehab cost 

Keep in mind you may get a 7 year term on a 20 yr am - which would increase payments and decrease cash flow accordingly. 

- What level of rent decreases can you sustain if new units become available?

The value of money decreases. 

This would make your property value decrease and be less marketable.

I've created an LLC that is renting out room to government employees on temporary duties, and they pay via their government travel cards.

With competition, quality rises and costs to the consumer decrease.

I have seen everything from single-family homes, apartments, and large multi-family buildings go green/near-net-zero and at the same time: increase revenue, decrease warranty issues, decrease turnover, and have happier renters who take better care of their units. 

Many times the Hard Money Lender will require to know this since their loan is designed to be temporary (6-12 months type of thing). 

The only good news I can think of is my insurance and taxes may decrease however I did buy this property with the intention of having 3 separate units.