How would the higher monthly cash flow change things with a 10 vs 39 year mortgage10 YEAR MORTGAGE16,200 added per year at an 8% compounded return for 7 years= $156,11330 YEAR MORTGAGE$9647 ADDeD /YEAR 8% RETURN FoR 7 YEARS $92,900So it appears shorter term loan, with returns reinvested will produce a greater return and a greater ROI with a few assumptions.

Even if you decide to use a different valuation method, doing a DCF analysis helps you think through all of your requirements for the transaction, and makes you think about the assumptions you're making in terms of the market, and your costs. 

@Paul RPMy assumption is that you're either more familiar with multi family or commercial assets.We have a small portfolio of single family stuff. 

So your inspector was likely giving his opinion based on the assumption that you intend to keep this a C property and not try to make it nicer.

My assumption here is that with the higher sales price (and a down payment), I'd be able to cover the existing mortgage and have some cash to use towards another purchase (of a studio, likely) that will CF.

My preliminary model has some assumptions that can change the deal drastically.

@Lisa DacontaThere are a lot of assumptions in your question.

I hear a lot of people saying they want to grow grow grow but have no exit strategies in place that don't include some serious assumptions about where the market will be when it comes time to exit.  

The whole approval process can take weeks, months so if this is something you are serious about, take note that this is not something that is typically done in a day or two.I would assume blueprints for commercial properties are proprietary and cannot be found online, but this is just an assumption on my part as my background is not in commercial development. 

I think the assumption is that you live there full time.