Also, appraisal and market values can be different and it might be lower than you're expecting.

Adding another meter base and city water meter could increase your cost to build a lot, but lower the monthly expenses. 

While we do have cash saved up, we'd prefer to work on our credit for another year before looking at getting a mortgage or commercial loan to possibly do a fix and flip.If you were us, would you a) use our cash to purchase, fix and flip something older and cheaper outright which seems like a huge undertaking for our first deal, b) use our cash as the downpayment/skin-in for a hard money loan (balloon) while we work on conventional qualifications to refi at a lower rate in 12 months, c) My in-laws are in the process of purchasing a seller-financed home and are interested in "renting-to-own" their place to us.

If there were no vacancies or capex this year her cap makes sense for 1 year... you use your numbers as leverage to lower the price.

BUT, the positive would be:+ Catagory A neighborhood with stable renters+ Betting on property value will increase over 10+ yr given the neighborhood+ Turnkey rental, leases in place till 2018Would these positives balance out the lower CAP rate?

I haven't ever put in offers lower than 90% of asking and often will offer more than asking if that's my best price for the deal.  

@Mike Bonadies...Cash flow properties in a house hack are tough due to the lower cap rate in the DC Metro. 

The main 1st duplex has been painted on the outside, the lower level has the new windows installed, both units have brand new high effenciency furnaces and a/c, which the upstairs never had duct a/c always window units.

If I own a primary home (State A) and then buy a second home (State B) as vacation home - thousands of mile away - and eventually move to vacation home due to my job change - is it possible to covert the primary home to vacation home (refinance to get lower rate - but that won't work because primary home already got the lowest rate?)

There are so many pieces of the maintenance puzzle that can affect its efficiency.If you're not opposed to outsourcing, companies like mine offer lower cost alternatives to hiring a full-time employee and allow the cost of managing the maintenance to scale equivalently to your growth.