These properties typically do not have rent growth that keeps up with inflation.  

For most DSCR loans, down payments are typically around 20-25%, depending on the lender and the property type.

Issues 1) even garage conversion ADUs in single family zoned areas typically cost more to build than the value that they add.  

If you elect to use a VA loan, that typically means you don't plan to put any money down.

So, a house that would typically cost $100 per sq. ft. to build 5 years ago, is now costing $200 per sq. ft. 

Even with the balloon, this is more typical for owner finance. 

Do they value nicer finishes and design or is that additional cost lost on the typical tenant in that pocket?

And are they riskier than a typical conventional loan? 

Plus you can't typically get conventional financing because they want to finance to a person, not an entity.

@Brice Alef-Torrisi putting each property in its own LLC is usually overkill.Getting a bank account for each LLC is typically something you need to do to avoid "piercing of the LLC corporate veil" (actually depends on tax selection you made for LLC), but is also overkill.You haven't indicated how you are holding the deed for the latest property.If in your name or same LLC, you don't need a separate bank account.If in separate LLC, you can create a Master LLC, have each property LLC hire the Master LLC to manage their affairs, and just get a bank account for Master LLC.This is an opinion, not advice, so lookup CPA Frank Alcini in Troy for expert advice.