Eg, i have a friend/client who determines it based on income vs PITI.

Here's the deal:Purchase Price (PP): $95kRenovation Budget (via HML): $60kTotal All-In Cost: $155kARV (After Repair Value): Around $200kRefinance (via DSCR Loan): 7% interest, 30-year fixedRefinance Details:After the refi, I will pay back the Hard Money Loan (HML) at 11.95% with 3 points:HML: $60,000Interest/fees: $3,585Other costs: $1,800Total to pay back HML: $65,385After the refi, I will have $84,615 left in cash.Cash Flow & Expenses:Expected Rent Income: $1,700/monthProperty Management (PM): $126/monthInsurance: $100/monthTaxes: $126/monthMortgage: $1,043.75/monthTotal Expenses: $1,395.75/monthSo my monthly cash flow is about:$1,700 - $1,395.75 = $304.25/month in cash flow.Return on Investment:Cash Invested After Refi: About $18,385 (after paying off HML and closing costs).Annual Cash Flow: $304.25 * 12 = $3,651Cash-on-Cash Return (CoC): $3,651 / $18,385 = 19.8%I didn’t account for maintenance costs since it’s a full gut rehab, and everything is brand new.

I won't see any rents or income until after the construction phase is completed.   

I own a small portfolio that brings enough income for me not to have a w-2 income.

You need a designer who understands maximizing income on properties, or you need to understand it and be able to sketch it out. 

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IF you have super strong income and you and have a lower 1st lien, lots of equity - MAYBE your best bet is using a local bank or CU to get most competitive HELOC inv terms.

To go a bit further into what Dmitriy mentioned, since your IRA earns the income the tax treatment is specific to your IRA.

@Chris Pratt Since single-family houses with ADUs are not considered commercial properties, they are not priced based on income or cap rate.

Higher property taxes in Worcester, coupled with a lower average household income, make profitability more difficult to maintain.