In your 'assumptions' and projections, Would you rather...1.

We've closed had a few luxury/jumbo STR's that way, where the revenue is surpassing projections. 

Permitted or not, you want 100% assurance the property is within building code standards for the year it was built, and for any upgrades/ changes - the years those upgrades were made; ie GFICs in wet areas currently, but not required in original construction back in 1950 when they didn't exist.sorry for not replying earlier, I'm rarely on this platformbest of luck on the project

I was wondering if you found a lender, and if so, how your project is going.

And the cracks mostly follow the drywall seams from what I can see, which is typical....And as @Patricia Steiner said, it doesn't look like a pro installation....You could ask the Contr to use a flexible compound if this happens again, or maybe even now...https://www.dap.com/products-projects/product-categories/pat...Like everyone else said, I'd have it repaired - by a licensed Drywall Contr. - and then just check in on it.

My wife and I come from a manufacturing leadership and project management background.

From there determining what you have budgeted for your first project.

Part of the investment thesis was getting it for a bargain, then building an ADU complex on it as affordably as possible, getting it to cash flow, and realizing value on both the rental income but also property appreciation given the work going into it.If the property will really only be worth ~$1.70M once we are finished, I will likely just stop the project now and exit the house as soon as possible.If you do not get dollar for dollar for projects such as this, how would house flipping ever work?

I have made some local connections for contractors to do something solo when my current projects wrap up. 

Having a solid GC to lean one as you start your first BRRRR project is going to be crucial to your success.