Been dealing with NYC DOB, initially as an Expediter, now as a Licensed Architect on behalf of my client's and their projects since 2005. 

I initially thought that variance was only to change from 2-->3 units for example.Regarding finishing basements without bedrooms, in your experience is it just hoops that need to be jumped through/permits needed, or are there scenarios where you could be denied/not approved entirely?  

I wouldn’t do an initial draw at closing.

I claimed for years 1) initial cash flow and cash flow over a long hold have a poor coupling 2) that I would purchase a property with negative initial cash flow.  3) I cared about total return and did not give a $hit about cash flow if the other returns produce an outstanding return 4) that cash flow is my least favorite return because it gets taxed annually. 

When initially purchased, the property was in disrepair and had not been properly managed for 10+ years.

A STR is both a business and a real estate investment.Having little oversight on a newly formed business would make me anxious also.As others have suggested, you should consider going to the area for the initial items(Purchase, renovation, etc).Once you buy 1-2 properties, you can look to unload these items to someone else.Best of luck

My hesitation is that after accounting for all of the items you are supposed to account for when analyzing a deal, the CoC return on the down payment is pretty much negligible initially.

Anyway, those are my initial thoughts. 

in short, it's going to take a lot of networking and time that doesn't initially have any revenue attached to it.hope this helps

Now, we are out of the identification window so we are left with either trying to save the current deal (which involves accepting terms that weren't initially part of the deal or call it quits and pay the capital tax gains on half of the proceeds from the sale.Are there any other options that would be worth considering?