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.

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.

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?

One must accept the fact that there will be mistakes, there will be cost paid, but in the long run, as long as one doesn't quit, and try to improve on the process every day, one will get better.