@Roy Oliphant  I have heard the unconscionable profit argument for the last 40 years.. its BSif your fair honest and lay out the options its no issue..

Or you can always post in the craigslist Real Estate Wanted area, and lay out your down payment and max price, terms etc.

Does the language of the law mean that I am not able to terminate the upper unit tenant's lease because the lower unit (similar size/layout) will be vacant?

We would bring in a national operator to run the facility, so we are just looking to ensure that the building has the proper facilities and layout.  

You might want to consider forming a corp and building business credit so when you need to do improvements on your properties you dont have to lay out your cash.

We had just rehabbed a very similar house, almost exactly same layout, for $25k.I responded to him that I thought $200k was a fair price, explaining that if he sold with a real estate agent, he would net less than $200k.

IMO, residential is more intuitive and thus why people start there.The reason people go commercial is scalability.

Amy, first red flag is you "heard it from a guru".Second, your intuition that this is not right is dead on.

(numbers would come later if positive consensus i suppose)anyway, this is a 5plex property that is stated to have good cash flow with several long term tenants, all units leased, (dont worry, i know thats stated,but for arguments sake, lets say things work out) it is an 8bedroom 5bath property and I believe the current layout is 3x 2/1 and 2x 1/1. my interest looking into this initially is, since i dont have the $ for a commercial mortgage, even if said property worked out well #'s wise after due dillegance, would it be a reasonable idea based on layout to try for a FHA 203(k) loan and convert the property to a 4 plex to make it eligible for FHA financing?

@will For age do you mean the functionality of the property, mechanials, and layout.