Planning is key here to determine your estimated income and how much gain or recapture each property may produce.

Where can you find a property that produces a positive return in that scenario?

In appraisal, there are generally 3 approaches to value - sales comparison, income, & cost.sales comparison approach is typically best and most reliable for residential real estate (4 units or less), income approach becomes more reliable for commercial properties (5+ or more residential units), and cost approach is better suited for newer builds, unique, and/or income producing properties.

For flipping you have to be in a viable market that produces such opportunity. 

He assume each unit produces $200 per month cash flow - $9600 per year.   

That is for, if necessary for us to sell our existing home and move to the number one produced, which will be the first "model home".

That is for, if necessary for us to sell our existing home and move to the number one produced, which will be the first "model home".

A primary home is not an investment, as it's not producing you any return other than appreciation which you have access to only selling or taking out loan.

In my state, we have to produce an itemized list of all expenses that came out of the deposit within 30 days of tenant moving out.  

This must produce positive cash flow to protect downside. - Understand the upside of the "rent by the room" strategy- Understand the upside of any repairs that can be made to the main unit. - Understand the cost/value of completing an ADU project- Underwrite mid-term and short-term upside cases as well.