After it's stabilized looking like $28-30K annual cash flow, probably $72 per unit with a 4.3% cash on cash return.....assumptions using market standard opex since you didn't provide that but did you underwrite this one? 

This means providing top-notch customer service, keeping the place clean and comfortable, and adding thoughtful little extras.

While using a QCD may encourage the Clerk to accept the deed for recording it won't help if the DOR decides to audit the information provided with the conveyance. 

A local RE professional should be able to provide this information to you as well.In New York, we deal with this scenario frequently and oftentimes it does not make sense to legalize ADUs because the permit process is extremely lengthy, the cost is high (sometimes $150-300K for 1 ADU unit), and the potential increase in property valuable is not worth the risk.If you already have an approved permit/plan and can get your renovation down to $80K, you may want to consider this project if the ARV is say north of $800K.** You should also look into any potential property tax increases associated with this change.

Like others have mentioned turnkey is a great option, there are several providers that operate east and north of you where the price points/rents are more favorable while laws remain landlord friendly.

As long as your credit is good you, if your HELOC rates go up, you should be able to rinse/repeat that "0% balance transfer" option every couple years until the debt is paid off.There are alternatives out there as wellLoan on your 401k or IRALoan on your stock accountDown payment assistance programs that provide all or some of the downpayment money.

May states ca provide a good return/cash flow on a purchase price of $175K to $300K.

The management company just happened to be hooked into the deal with Growth Equity group and they also provided the interest only hard money loan for the balance of the purchase price. 

What impact will it have on them renewing their lease?

Mortgage lenders that provide the IRS with 25 days’ notice of an impending foreclosure can avoid paying off the tax debt when seizing the debtor’s real estate.Unlike other unpaid junior liens, the IRS’ security interest isn’t terminated by the property foreclosure.