Short-term rentals come with fixed expenses like licensing, listing fees, and optional property management and furnishings.

Management fees will more than likely run somewhere around 8-10% of the monthly rent at minimum.

In theory my only costs would be purchase of the lot + associated fees, taxes, and engineering services (which I could do a portion of on my own time). 

So, you are correct, 9 times out of 10, a client is going to need 20% cash down on a 5+ asset plus fees, closing costs, etc...If you can get the seller to take a 2nd position for let's say 40%, then we would come in 1st at 50%, the seller at 40%, and your buyer at 10%. 

@Steven Catudal If you have enough for the downpayment, why not originate a construction loan through a bank to fund the improvements? 

Pay filing fees.

I was told my legal fees would be around $700 dollars and the appraisal is costing me $550. 

By my understanding, they pay a fee to apartments for the background check and application, right?

Andrew - I think you've accounted for a majority of your costs, but just a few others to consider include: vacancy factor (typically 5%), turn/over or releasing expenses, and property management fees (7-10%)  - whether you pay someone else or do that yourself you might want to include in your calculation.

On the other hand, employing the on-site manager through a property management company reduces your administrative burdens and leverages their expertise, yet it may entail less control and additional fees.