Is it possible to have denser development?

It’s possible to start small, build experience, and scale over time.

You are right, when the inspector mentioned the possibility or prior water damage is when you should of had that basement inspected by a contractor/professional and not listen to your agent.Gregg is right, the sellers were aware of some of the damage which is why they gave you a 5K credit. 

You need to remember that, hopefully, this is a long-term play for you, so work with a trusted STR designer (I have great recommendations), and spend the money upfront so you can be the most successful in your area.

But now with the joy and headaches of non-metered units, trying to wrangle 3 different set's of persons into playing nice, etc etc.. 

They are going to have a pool, possibly hot tub, maybe a snack bar, and be beach front. at least comparing to the PCB market, most houses in comparable prices to condos dont have those things and are not beach front.

This clearly has nothing to do with laws, regulations or operating numbers but I do think it plays a large role in the decline of the market.

Quote from @Rereloluwa Fatunmbi: Quote from @V.G Jason: You literally jumped in the fray of an oversaturated play in a really suspect area of Houston. 

@Eric Smith A 1031 exchange with a related party is possible but comes with strict IRS scrutiny and holding period requirements.

As ground-up ADU builds gain popularity I hope we see some affordable options, like modular, but from what I'm seeing now the ROI just wouldn't be there.I'm trying to help spread the word about this law and compile as much information as possible so I can help investors capitalize on it.