Just requires a lot more cash up front and having it held up for a few years.

They seem to require high quality materials and  craftsmanship to maintain a level surface.

Conventional also has a tighter DTI requirement, and higher reserve requirement.

@Joseph McElmeelHey JosephThe fha has a lending requirement for fourplexes that could cause you issues and that is the self sufficiency test.

I would think of this problem differently: I might encourage them to explore ADUs... this would give them an additional stream of income and would likely only require a relatively small chunk of money in their savings (relative to the total cost).If they could partner with someone that has experience building and/or flipping (to qualify for the construction loan), then cash them out with a 30-yr DSCR loan (and use that as the builder's profit), then they could rent the property and enjoy the cash-flow.

What are the requirements lenders look for in this scenario?

It requires more effort but can significantly accelerate your portfolio growth.Down Payment Assistance Programs: If upfront cash is a concern, look into down payment assistance programs.

I can tell you that Freddie Mac and Fannie Mae can require bldgs to be in "single asset entities" .... 

Purchase price: $264,000 Cash invested: $30,000 Used a conventional loan and "lived in" the property until "unforseen events" required me to move out.

If this situation harms you, it may be worth selling and trading for something that produces less return but requires less work.