If their program shows a lower valuation than what you've listed/applied for, they'll require an appraisal.Alternatively, you can ask them what value their program came up with and if you're OK using that number instead, proceed with it.

If she lowers it great if not move on

I would pay him back at a higher interest rate than he pays the bank, but at a far lower rate then any hard money lender would lend to me.

With only 1 or 1.5 bathrooms, there is also less mechanical things to go wrong which gives you a lower cost of operation vs. houses with more bathrooms.

schools are decent, crime can still be a problem in certain areas, and a lot of lower income people still have a problem qualifying for a mortgage.

I can restart the 30 year mortgage but with lower monthly costs, thus making our current rental bring in more cashflow without raising our current tenants cost. 

I'm moving into a lower income neighborhood where there are corner stores in between houses and folks sitting on their stoop during working hours, and the crime is lower there than the city I live in with 500K homes and horse farms.

Good areas (lower crime and nicer/newer houses) are east of 435, north of the river, and down in the southern suburbs.  

Inherited tenants at a lower or market price?

After doing an initial walk through and coming up with a renovation budget and sales comps we decided to offer $105K (Yes an offer $65K LOWER!)