The income amounts look to be long-term rental (which they are and came in 30% lower than what the STR average did) and 2. why did the appraiser look at homes 20 miles away to compare to when there are PLENTY of rentals in town...

Over-budgeting is critical to ensure that renovations don’t eat into your profits.Market Fluctuations: If property values in your area do not appreciate as expected, or if you face a market downturn, the amount you can refinance for may be lower than anticipated.Financing Challenges: Securing financing for the initial purchase and rehab, as well as refinancing after the property is rehabbed, may be challenging, particularly if the property is located in an area with fluctuating values or if the rehab work doesn’t immediately improve the property’s appraised value.Tenant Risk: Rent collection and tenant management can be unpredictable.

The house I will get is in a lower income area, currently worth $95-100k, and she still owes about $25k on it.

In this case, your monthly payment with 20% down will have a good MARKET rate if your DTI works with a much lower month payment and no mortgage insurance(MI).

In a climate like this with high rates, probably better to use a Heloc so you keep the lower rate of your 1st lien.

Alternatively, DSCR loans offer long-term financing with lower rates, but they come with more complex requirements.

You’ll learn the ropes on how to be a landlord with a lower risk/higher quality tenant-base. 

Lower appreciation than single family home

This implies residential units can be built at lower costs and provide better return. 11) adding an ADU to SFH can make the SFH fall under rent control.

Lower risk all the way around.