That's aside from a renter placement fee (from a property manager or real estate broker), so with that into account, it could be about $3000 into the red on year one of a rental lease.

Hello Mike, It is nearly impossible to answer this question without taking a deep dive on the numbers of each but often times in expensive markets like Seattle the cost of construction is so high that it doesn't make sense to tear it down unless you can build something way bigger/nicer.

Have done some preliminary research and will do a deep dive, just wanted to see what folks thought of there were any obvious reasons why or why not or any markets similar that I should be considering.

If you only have a homeowners policy, and something happens like a fire or a guest gets injured, and the insurance company finds out you're renting out the house, you're in deep trouble. 

I instead look at it as a potential red flag.

I would use the funds to buy at deep discounts (60-70% LTV) and then wrap with seller financing.

Quote from @Kody Smith: without getting too deep into my finances, what my strategy is...1. take loans to buy properties (leverage)2. fix/flip for day to day cash flow income3. use some of the fix/flip income to buy consistent cash flow through:- business acquisition, - commercial properties (MF and store fronts),I have no intention of doing ALL of the management myself, I will hire management as needed (medium term goal)my expected core role is money provider, evaluating the numbers, making decisions, and connecting with investors, wholesalers, lenders, contractors, and property owners.while I am just on step 2 of the journey, I am looking toward step 3 to stabilize, and not worry about if house prices drop mid project or not (or not worry as much) So to be fair this is more about obtaining and growing a real estate business not simply buying rentals for cashflow.

Now is the time to dive deep into researching the markets you’re considering.

We try to get the DSCR to 1.2 before really diving deep into it.

On the other hand if they are a sponsor that is experienced in stopping a skin in the game, that's a huge red flag for me.c) how open to scrutiny are they?