Even with the reduced rates, my cash flow is poor for my equity position (i would still be cash flow negative at today’s rates).  

This could involve offering a higher interest rate in exchange for reduced upfront costs or deferring payments until a certain milestone.If building right away isn’t feasible, consider buying the lot now with the goal of paying it off over time, and save up to build when rates and budgets align.

I again state the problem is with the underwriting.  8.5% vacancy, pm 15%, 25% turn over (using my reduced numbers) or 37.5% using your actual, my minimum maint/cap ex would be 50%, prop tax, insurance, missed payment (seeing my vacancy only included the one month turn over), P&I?

In the long-run this could reduce turn-over, maintence costs, vacancy and the need in the first place to have to offer $500 discount off the first month's rent.

Examples could include:Partnering with other investors to share risk.Using seller financing or lease options.Leveraging creative rehab techniques to save on costs.Negotiating with contractors in a unique way to reduce expenses.I’d love to hear any stories, tips, or approaches that helped you pull off a deal others might have instantly passed on.

But it seems to my simple way of thinking isn't that *also* going to reduce your monthly benefits to a large percent?

Depreciation can be applied to the investment portion, reducing taxable income.

Even in the nice locations, most top out around $2,800.Of course there is also your increased insurance, vacancy, repairs, CapEx, and the never mentioned reduced rent on the main house since having a stranger living in your backyard usually isn't appealing to most renters. 

I thought people would just refinance their loan if they got it at a high interest rate, reducing the risk of jumping into the market at a bad cycle.

Although this is a long term investment and not in the main stream, it has added a certain level of comfort knowing the above potential investment risks are to a degree reduced.