While it sounds like you're both active investors, I don't want to make assumptions as to whether you/your husband are active or passive investors.

Most posts on BP regarding LLCs are referring to two members and I replied based on that assumption. 

Using the sales price and square footage you have cited and inputting the line item values for (Commissions and Closing Costs, builder's profit, Lot Cost or Value, soft and site costs) the pro forma shows the amount of hard cost (ground up construction) your assumptions allow to spend on construction.PM me if you'd like me to send an Excel version of the worksheet so that you can play with these assumptions yourself.Best of Luck,Barry

I wouldn't want to buy on the assumption that I could legalize the unit and then find out I couldn't.But how do I assess this? 

. $439,000Rent $4,400Mortgage ($1619)Taxes ($260)Ins ($154)Lawn ($100)Vacancy ($220)Repairs ($150)Capex ($150)Mgt ($440)Income $1307COC 18%All these are assumptions and I believe I’m being conservative on the rent after renovations.

for us and our clients, we're going into our investments with an assumption of 0% appreciation for the next few year.Yes it is possible to make $50k on a flip in the next 12 months. 

Again, others might feel differently here.3) property level due diligence: (takes seconds to weeks per deal): here is where I drill in with the low-level details.a) pro forma popping: I examine all the assumptions, and see if they are overoptimistic or not.

But I question the landlord paid expenses and future assumptions.  

Regardless, you should run it both ways so you know how it will perform when you live there and when it's a pure investment.Regarding your analysis (I'm assuming $3700 GSR is for all 3 units):I worry your rent assumptions might be optimistic.

We use Michael Blanks SDA analyzer to help with our assumptions.