While I could have gone lower I am lowering my risk tolerance because I expect a recession in late 2019 to 2020.

You can use the "bad roof" or other problem to negotiate a lower purchase price. 

You could also get a line of credit for about $150k (you should be able to borrow 75% of the value.)The reason I suggest this is…1) you save $40-$60k in selling costs. 2) you have a lower blended interest rate (2/3rds at 3.25% and 1/3rd at 7 or 8% instead of the whole $500k at 7 or 8%) saving you another $1k/mo in interest. 3) you only pay interest on that $150k when you actually use it, not from day 1  Unless you hate this property, or want to buy something you can’t afford without selling, that would be my plan.

The rates will be lower and will allow you to maximize profits.

The numbers may be 30-40% lower than today's cost, but the process/approach to estimating may be good for you to review.

Since new builds require upfront capital, you might not see immediate returns, but lower maintenance costs and higher rents typically make up for it long term.If you're serious about scaling with BTR, make sure you connect with experienced builders, property managers, and lenders who understand the strategy.

This likely will result in a lower unit value than if value was derived from comps (especially seeing commercial MF values have fallen in recent times).Good luck

You are competing against other owners who have a much lower basis and/or debt cost to cover. 

Seems like it'd be lower maintenance since it's a new build and in a nice area.

Rentals also build equity through tenant payments and appreciation, with profits taxed at lower long-term capital gains rates when sold.