I see so many room illegal additions/conversions where the homeowner spends a lot of money on the project, but when they sell the appraiser assigns it no value because the square footage is unpermitted.

@Raymond Morris what are the projected rents per unit and what’s your estimated total costs after repairs/upgrades?

I have also seen this with smaller projects.

Long-term looking for a portfolio lender and easy refinancing for BRRRR projects.

The sellers will simply decide not to sell and simply refinance or place new long term debt and wait for a better cycle time to sell.If investors put in tons of low ball offers themselves then maybe once in awhile they get very lucky but they will be on tons of owners and brokers IGNORE list.Now I can see sellers who are not sophisticated like in commercial real estate be able to be more easily manipulated.

Also, if you know that you'll be done with the project in 6 months for example, you'd be paying half of the cost in interest making the numbers relatively close to going conventional. 

Are there guidelines on wether or not this would be a good market for such a project?

See if they are using actuals or projections (actuals = reality, projections = fantasy. 

Therefore, it is still very beneficial from a tax perspective to invest in an OZ fund for that reason alone, assuming of course the OZ project makes a decent IRR over the 10 year required hold period.  

Find a good contractor and partner with them or just use them on your projects.