I have not done one, but I heard they are time consuming and sometimes the contractor does not get paid until the work is done, so you may need to pay the repairs up front and get reimbursed or find a contractor that is willing to get paid on the back end. 

Once your neighbor is in official foreclosure there's a bunch of extra consumer protection laws that kick in that I'm not familiar with.

We will not need the government to bail out companies which in term sends a shock wave throughout consumer sectors as we saw in 2006.

The factors here are several layers deep...1- The threshold decision is rooted in local ordinance and zoning...if you're in an area with tight local ordinances you're fighting with the people that live in the neighborhood before you ever reach the city zoning folks...this can go one of many ways2- ROI on the conversion...you're first stop should be with a local architect...they are worth their weight in gold when navigating a project like this and will wade through the regulatory waters much better than you...and a simple phone call may be telling to whether the conversion would be permissible.The extension of this is the cost of the renovation in relationship to the rents received...the stars would really have to align to say you should spend a significant amount of cash to convert a performing building with 4 revenue streams to serve another function (but there is more to this)...and the cost of construction (and lumber in particular) is 5 fold what it was 1.5 years ago...3- As you indicated...exit...I think the only rational reason to convert a 4-unit would be to get condo status or single family/ shared wall and sell one or both of the units to an end buyer (you are basically paying the role of a speculative developer here)...this is happening frequently in locations like Olde Towne East and Merion Village...hard to demonstrate how successful this has been, but it seems far fetched reasonable consumers would pay the same for a  free-standing SFR they would for half of a "duplex" or condo, but who knows for sure.Either way you look at it you're in a residential appraisal situation on the comparable sales approach....4 unit buildings are still "single family" homes. 

This negative return could consume years of cash flow.by the way both his units had their own yard space.  

Invest in assets that leverage inflation.As consumers prioritize their expenditures less towards luxuries and more towards necessities, investments in tangible assets that revolve around consumers' needs and not wants are what will best insulate a portfolio against the corrosive effects of inflation.The ideal asset will generate recession-proof income while appreciating in step with inflation.

They do not recognize the difference between a business purpose and a consumer purpose loan.

Consumables, replacing damaged items or worn out items after all the expense of furnishing each unit in the first place.

In 1978, the federal government banned consumer uses of lead paint." 

New construction, on small lots is consuming the majority of the rural land.