Also, for anyone based in Philly, I've heard from one contractor that quotes of 20-30k were common a few years ago, but due to recent rule changes, contractors need to maintain excavation licenses/ insurances to do any dig out work and that cost is getting passed to customers.

That generally means going where housing is still relatively cheap, holding costs such as taxes and insurance are relatively cheap, and there is a lot of upward pressure on the housing market. 

DSCR is a better option on rates and cost compared to Fannie and Freddie loans.  

After analyzing the deal further, estimating holding costs, realtor fees, monthly costs on hard money, estimating the worst case scenario of it taking three months to sell (average time here is 43 days), rehab costs, insurance, etc., I am pretty sure we need to pull out. 

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years.

It has a population of about 90,000, and it is a much higher cost housing market than Albuquerque (incl Rio Rancho).

You can try to incorporate a seller concession to help cover closing costs and reduce cash to close.

I love this idea, but would first talk with your ciry to determine the building regs.Have you done any comparison to see the cost difference than just building a typical multi-unit property with small units?

My credit union does 95%LTV with no closing costs and desktop appraisals.

Those factors don't even take into consideration the cost to prep a unit at turnover and possible placement fees paid to an agent to find a replacement tenant.