The earlier you start in your RE journey, the better off you will be in the future. 

U want your parents to talk to their CPA FIRST.. if they go the development route they are now ( depending on the amount of units) creating inventory.. which will be taxed at ordinary income rates ( very HIGH)if they just sell they can 1031  and move on to something else.. many times when you run the math consider the risks of a partnership.. the sale of the land is far better than thinking your going to make some profit.. 

You will get a better rate on a first DSCR loan compared to an investment property HELOC.

Development is a speculative investment, and limited partners typically will want a much higher upside potential, so you might be better off starting a fund where you agree to share the profits with the investors even after they recover their initial investment. 

Also, PriceLabs will do a fantastic job at pricing your place for you, surely much better than your property manager (unless of course they're using such a tool), if you also connect to their dynamic pricing tool.

Managing the rehab budget, need to get better at it as inflation continue to rise and labor and materials continue to increase

Anything less than that means the DSCR will be lower (the higher the DCSR the better).

If I added a 3rd bathroom no one would ever know any better because my house had a CO in 1967 , it doesnt ever need another .Sounds like your towns are police states , why would you let someone in to search your house for extra bathrooms or bedrooms . 

Demanding I sign a document saying the house is in better condition than it was when they moved in, etc. and I must do a walk through with him, and give him his 2K deposit back.

I personally would wait for better investments with the B or higher properties.