This site is great, but sometimes the emphasis on cash flow, cap rates, cash-on-cash misses the point that there are other goals with real estate than purely squeezing the most money out of it.Good luck!

I would be in charge of running the project, construction, all costs, I would float the project.Once the first unit is completed we would put financing on it and the proceeds would then fund subsequent phases, enabling us to progress through the project over a multi-year timeline, likely spanning 3-5 years.Estimated my construction cost would be 350,000 per building (pure cost no profits).

So as  things stand, renting is a pure speculation play. 

This product is no income no doc and underwritten purely on the rent schedule of the property .

If that is the case, that there isn't a lot of equity in the home AND the luxury item will add no market value, then it's purely a luxury item, and probably best not to finance it at all, even if in theory you could just put it in a credit card. 

Installing tile, unless it's purely an expectation of the market, will most likely not increase your return.The expense of tile is not in the materials so much as it is in the labor assuming a reasonable material selection.

A props can absolutely sell to OOs, but unless you find an incredible deal, your PITI will eat up your cash flow, which makes it purely an appreciation play for 15-30 years .

I want to preface this by saying that this scenario is purely hypothetical.Let's say I use FHA financing for a 3/1 SFH.

The purely financial answer really lies in whether you can make better than the 4% interest you are saving, by putting that money to work somewhere else.  

Is it purely financial?