All I see it doing in my area is making folks have to buy a slightly more reasonable house compared to what they're able to qualify for currently. 

What he is offering is:-His team will do the due diligence on the title to ensure it's clean-acquire the property from auction with room to make 20-50% profit-provide actual comparables-consultation prior to auctionHe wants a non-refundable payment of $2500 to set up an account and the $2500 per property making it $5000 up front (in addition to actually financing the properties in question).

How do I come up with comparables if the house is the biggest one in the subdivision?

Where are the units renting compared to the market? 

Nor would changing the configuration of lighting, plumbing, etc - the inspector is going to inspect what's there, not compare them to original plans.Other areas will vary, particularly in areas where government tends to be more heavy-handed.

As David mentioned above, buying in expensive markets can be very profitable compared to cheap markets.

Comparables in the area seem to consist of other manufactured homes, "stick-built" homes, and detached homes.

Cost of living is really low compared to other metro areas so housing is affordable.Yes - she is a little rough around the edges but you take the good with the bad and try to improve the latter.

You will find this is a cheap fix compared to the cost of private or bank lenders.Also, for single family ( 1-4) investor loans, Fannie's limits on investor loan is a little more complex than you explain.  

Get multiple quotes and compare them.