Consider cleaning, lawn care, snow removal and supplies as well as utilities  in your calculations.  

That would be a foundation issue to make sure the current foundation is able to hold two more floors on top and also a height issue for the town for the area.

In fact, I just tossed away an amortization book of tables that I've had for almost 30 years, when we were doing some winter cleaning - the lowest rate it went down to was 7%.

OP said: It’s frustrating, especially because our due diligence came back clean, leases were solid, and the property had just been fully renovated.

But it's a 3/2 and I think I could rent it for $1000-1200, has a lot of NEW things already in it (AC/heating, kitchen cabinets, appliances, flooring) but bedrooms need to be finished remodeling. 

I don't think the fact that prices have gone up 5 years in a row is a good clean indicator that they will continue to do so, if it cashflows today and I can hold it for 20 years inflation should do most of the heavy lifting for me. 

In my early days of rehabbing I used to wonder how the heck do people miss-fire and pee all over bathroom floors.

I’ve lived amongst the roommates, as well as in separate places like the basement or having a third floor solely for myself.

@Michael Palmer As a general rule of thumb bank originated construction debt will be WSJ Prime +1 point with a floor, 1 point origination and 75-80% LTC while meeting certain LTV thresholds (normally 70-75%).

If you warned them and they didn't clean things up that could be a reason. 10.