Once you do this conversion it will be difficult to change it back to a traditional long-term rental. 

As others have mentioned you could have a conversation with your tenant(s) about splitting the cost.

Ive certainly purchased properties at serious discounts to the listing price....but it wasnt just random shotgunning of the offers.What I usually start with when trying to see if a lowball offer is appropriate is having a conversation with the listing agent first.

There’s a huge difference between winging it and setting up a system that consistently brings in genuinely motivated sellers.Get a website, focus on the 3 pillars of conversion (look it up), and crush it.

Always get permits for conversions and be cognizant of the experience renters will have in your home.

And your Realtor would know more about what’s typical with new construction in your State, but I feel they should be fighting for your interests, and be the one having the conversation with the sales rep about a reasonable amount for the earnest money deposit, on your behalf.Glad you haven’t signed anything yet and hope you manage to come to terms that work for you.Keep us posted!

Which makes more sense in terms of fees and conversion rates?

Having a conversation up front can help you avoid lost time and money in the long run. 

If so then you should have a serious conversation with your cpa to figure out the tax benefits of pursuing one strategy over another?  

when you put your property on the Padsplit platform, did you purchase an existing pad split home or did you have the conversions done to make more rooms?