Plus lime is increasing in usage.Downsides.  

An easy flip at 7-10% return might be more lucrative than a larger project that takes longer and more chances for cost over runs. 

Starting with a small multifamily property is a fantastic idea—it gives you a chance to live in one unit while renting out the others, which can help offset your mortgage and build equity faster.

What are the chances they do?

Deviations from the PLRs will significantly increase the risk to you since your transaction did not follow the PLRs exactly.Deviation from Private Letter Rulings There are a couple of areas where transactions deviate from the three (3) Private Letter Rulings discussed above.

Borrower has the 3% loan in place for the duration, and 14% investor can be paid off with increased rent in say 18 months.  

Code enforcement in Coronado is stricter than the rest of the city, and it does fall under the coastal commission jurisdiction.Depending on the parameters of the flip you can safely factor for an increase in your timeline for permitting of about 30 days. 

I think first step is to find legitimate comps that match and support your 130k valuation and dispute the report to give the appraiser a chance to fix the report. 

Once you increase your real estate portfolio using these tax free money, part of the cash flow they generate is offset by the non cash deduction (ie depreciation) so you get the equivalent to the depreciation amount but don't pay taxes on it.

Aside from the increased rental value, properties that are on water, or have a view of the water, are going to appreciate in value at a higher rate than the others.