@Lucas Schlund If this is your first investment, how confident are you in your budget, time frame, contingency allocations?

Subdividing the lot would add an additional $20k in expense as I would need to tap city water/sewer to the new duplex (previously the detached garage apartment).

Because of the weather those STR often do 6 month ‘winter rentals’ and I have not heard many complain about not finding a renter for that timeframe.

Construction costs have continued to increase during this whole time frame.

Sounds like you have a one year timeframe. 

We lived a few miles from campus and the houses were pretty inexpensive at the time.

.- Home Inspection Contingency: Include a clause allowing the buyer to conduct a professional home inspection within a specified timeframe.

Neither has paid any rent during this time frame and the owner has had to paid all expenses. 

To date I've been able to account for smaller expenses by tying them to a specific property if for example I'd purchased an inexpensive hand tool for a specific project on that property but I don't think that would be the proper way to account for more expensive tools that I bought for the overall business like a new lawn mower or something. 

That means you must work to re-rent the unit in a reasonable timeframe.