One thing I would add is to look for the concentration of nearby extended stay hotels, e.g.

Even if delivered vacant it can take a considerable amount of time to legally de-regulate a stabilized building and it mostly requires you to have the units vacant for a period time (no cashflow).

So don’t over extend yourself. 

Their current lease extends to  April 2025, which at that point we were planning on selling.Why sell in the first place?

Perhaps adding an additional half bath is optional and could be eliminated if issues come up or perhaps for someone who is hands on perhaps they could take on more work themselves if they needed to and extend the rehab time period.

Currently, the City generally categorizes short-term rentals, such as Airbnb or Vrbo, as hotel, motel, or bed and breakfast uses because the lease period is less than 30 days.

If you are financing this with a DSCR program you will be looking at high 8s to 9s depending on the Prepayment Penalty Period. 

It is covered under Federal Fair Housing..states can extend Fair Housing to include source of income.

HELOC then you can use the equity for another deal but I would only use it if its for a flip or brrr or possibly if have a plan to pay the heloc off over short period of time.

The larger projects I am looking at, would require more funds (probably around $500,000) and a longer hold period (3-5 years).