The loan we were applying for is an FHA, which stipulates we must provide a signed lease for our half of the duplex (to be newly rented out) but for the other half which the parents "own" (in reality all three are equally owners of the entire property.) we would need to provide proof of rental income on our tax return, however her parents claimed that so we seem to be SOL.The mortgage is covered, we can rent it out no problem, but the underwriter is saying on paper it looks like she is responsible for the whole duplex and the rent for half of it is unreportable.

Hi Richie, zillow&redfin These platforms provide property details, including ownership information in some cases.

Even if you are looking at a time frame of 12-15 years later, the initial investment you would make may not provide you with big returns.

We just notify them certified mail and provide MHA the request form, 3 comps and proof that the tenant was notified of the increase 60 days prior.

We use Streamline as they are the legacy provider for larger portfolios. 

Floor mat is now on the porch.Williams Plumbing, Heating & Air is my new provider

You can easily handle it with a single bank account and some simple bookkeeping practices.

Some things that might be a concern:1) Obviously have to make sure things are all permitted first2) I don't want the room to "feel" like an addition, so flooring has to be same level/standardized with the rest of the house3) Unlike the rest of the house that has an identically-shaped 2200sqft basement underneath, this added space will not have a basement directly underneath it -- I'm not sure if this poses major cons for some reason that I'm not aware of4) Especially given the lack of basement underneath, I have to make sure that the HVAC can still somehow be piped into this room#2 and #3 are probably my biggest concerns (#1 and #4 I can find out relatively easily)Any tips/thoughts or other experience would be greatly appreciated. 

What answer did he provide?

And as @Jay Hinrichs says, the market needs to be right for this strategy and you need a little "jingle in your pocket" ;) Most the time you are bringing a seller current on payments, providing moving expenses, and tackling deferred maintenance/updates - or all three on sub to.