The landlord sent an email asking if they were prepared to commit to terms, with a lease to follow; the propspective tenant said they would be acceptable, provided that the lease was sent along shortly, and that they were no longer looking at other properties; the landlord sent the lease; the tenant then simply indicated that they had found another property.  

So even if you're the winning bidder, they will re-list the property at the same price or a slightly lower price.

Most of these sellers are simply looking for inexperienced buyers to not ask the right questions.

However,  in EVERY case, they simply want to leverage our expertise (have us do all the work), so that they can re-sell a property to their network for $11-15K MORE than what we would be charging the investor directly. 

This is simply not true.

When I run a scenario, I want to see IRR simply from me having a long term target I want to hit.

If you can't sustain the predicted cash flow, you aren't winning.

In future, as opportunity presents itself, we could deal with a tear down/rebuild situation, or simply sell then.

It's definitely possible, but as you mentioned, slow and steady wins the race. 

Even if the three original rooms dip to 400 and the one with its own bathroom goes for 500 than I’d be at 1700 which would be a win.