The cynic in me says that REI is not giving them enough cash flow and they need something else to supplement it...

It isn't my best lead source by far, but it can be a good supplement.

My wife and I started out buying a two-unit apartment house about 7 years ago with a similar goal... buying 1-2 small multifamilies per year to hold and pay off the mortgages to cash flow supplemental income.

No I wouldnt I dont over pay knowingly ever but for someone who wants to supplement their retirement with out having to deal with houses all over the place over paying for the house next door might just work for them.

However, they are re-doing the exterior and have not collected enough or banked enough HOA fees to cover this exterior cap expense so there is a supplemental charge to each owner that was approved by the HOA. 

Should we put down a 20% deposit for our first home, or should we put down a smaller deposit and use the leftover cash to pay for an ADU that will generate supplemental income?

Acquisition fees and asset mgt fees keep the engine running from the beginning thru the hold period, the real money is made by the GP at sale or some portion at refinance / supplemental loan when property renovations are complete / value optimized. 

My goal is to either retire in my 40s, or supplement my income so I can take a less stressful and lower paying job.

Hi BP,I have a retired neighbor in an in-town historic Atlanta neighborhood that's paid off his house and now he's looking to finance building an Accessory Dwelling Unit (ADU) that he can rent out for supplemental income. 

The mortgage payment, taxes, insurance, etc. would probably run me about $1,100-$1,250.Given my personal budget allows for $1,500/month in savings, anyway (plus a discretionary allowance I could tap into if needed), I feel like I could handle vacant months without feeling the squeeze.I would definitely use a property management service — the combination of my inexperience and my long work hours (often 70-90/week) means I am simply not the best candidate to manage property on a daily basis.I'm not looking for supplemental income out of this.