Put in a proper exhaust.

I’ve heard of people getting rehab loans where you put down %20 of the acquisition price and %20 for the rehab and you get much better terms than an HML.

The SFR + ADU is worth less than a Duplex because the ADU is viewed as an amenity rather than an additional unit so your appraisal will look for other SFRs with ADUs and provide line item adjustments for homes with and without ADUs much like having or not having a pool or a garage.

You’re likely going to be on the hook for S/E income on it once be depreciation and losses have been exhausted, so, just be cognizant of the overall picture!

It is still an island so it will take longer than an inland city.

Once complete, the investor has a property that is worth more than the purchase price + rehab costs.We've got more "skin" in the process than an RE agent as we have to rehab to get a tenant and than continue to manage the property and tenant to cashflow for the investor.This model seems to be growing in popularity with investors versus traditional turnkey.

That is very different than an option agreement.

Have they exhausted all other avenues?

Plus you’ll get a better rate as a primary than an investment property.

There are absolutely some additional challenges with the rent by room model and I agree it could easily be more work than an AirBNB.