High construction costs and interest rates?  

This may be an expense the current owner cannot afford.The auction company charges a Buyer's Premium (typically 10% of the high bid) and it is paid by the buyer.

Long term I anticipate construction costs will generally soften as the high-rate environment continues and stifles development.

I highly recommend you contact @Jorge Vazquez.

Additionally, my debt-to-income ratio is high.

Rates are in the high 5.00% - low 6.00% range for "Mission Driven" assets with rents <=80% AMI Net Max Rents.

Invested $170k since 2021 and total return of barely over $5k, which includes $2700 left from the first property they sold end of 2023(orig investment of 25K). 

Informative read about the high amount of ADU's being built in Los Angeles, the impacts they're having on the neighborhoods, and what local government is doing to preserve the "look and feel" of neighborhoods with the change in housing.

Do they still come with high closing costs?

We have learned a ton and I want thousands of units one day but for now just trying what to do next with this one. ok so the issue is that home was built in 1932 and the heating is an issue in the winter and the heating costs are really high for the tenants.