Ideally the space needs to be reconfigured to make better use of it as well. 

You ideally want some contingency padding in there as well (10%?

However, for somebody that has a good portfolio and wants to simplify I would argue that refinancing and reinvesting is not necessarily the ideal approach given the stresses that it can incur.Again, this is coming from a place of ignorance since I am fairly new to investing but I think the beauty of real estate is that you can make it as complicated or simple as you like and tailor your investment to your vision for your lifestyle so perhaps the one approach fits all mentality is what I am against.

. - Remember the 1-2% rule is a baseline, starting point.

SUBJECT TO existing mortgage of $125,000CASH TO SELLER $10,000WILL REFI BEFORE TWO YEARS ONCE PROPERTY IS STABILIZED (I deal with local community banks and will do a commercial in my LLC to cash out at 70% LTV to recoup back some of my initial investment?)

Most people that I deal with don't want to share a house with strangers. 

remember 2 years ago it was near impossible to get spec loans.

@Marcus Auerbach - thank you very much for the suggestion I will definitely reach out as that type of guidance would be ideal.

I remember when I told my accountant, who personally invests in hotels, apartments and single family; that I was getting into notes, his comments was.. 

Remember that (generally) while the bank can not call your loan early or increase the interest rate, they NEVER want to give you back money you paid them.