The lower unit needs work (about $12-15k) but can be converted to a 3-bedroom unit.

Getting into higher end for putting in lower grade product.

By the same token, I don't believe your repairs and maintenance expenses would decrease because you are charging a lower amount of rent per month. 

If the feedback you get from potential buyers is too high, then you'll need to go for a pricing reduction or reduce your potential margin to meet their need for lower pricing.

For $12,500 you will pay a lot higher fees and costs due to the lower amount.

Interesting to hear that offering a lower return may have got him more traffic

Hello Andres,We are currently contractors in Southern Oregon and hoping to start flipping soon, we are  leaning towards Klamath Falls area to start  as the  prices are a little lower over there to begin with.

Big box stores can be a great options with lower end prices as they provide a great guarantee.

The higher number of units you have initially means your vacancy risk is lower overall, which can be huge in managing stress. 

That just seems like a lot of work/risk to get a lower return than you'd get putting that cash in a REIT ETF and calling it a day.I would run away and never look back if I were in the situation you posted.