Total cost including acquisition price of $2.35m.I believe we will be able to create a total of 20-30 units in this building. 

The optimist in me states that if I build something beautiful/unique, I can stand out.

Thank you for your insights and for pointing me to resources that should be reviewed so I can build a model in Excel to evaluate this decision. 

How do I decline replacing it and keep a good relationship? 

I am seriously considering taking $150k of it and buying 3 new builds $50k down as rentals in somewhere like a Houston TX subburb, Wichita Falls TX, Oklahoma City OK, or Kansas City, MO.

Since you have a primary focus on house hacking, saving money, building equity in your current investment. 

If it is im not even sure a city will allow you to get a building permit on someone elses land.

I spoke with a consultant who works with/for Jason Hartman and she referred me over to https://www.mmasells.com/, has anyone worked with them? We are looking at AL, TN or FL as potential first time investment properti...

With Raleigh growing rapidly there are an incredible amount of new builds happening.

The issue that you have, is that your guests experience will depent greatly based on the demographic that the motel building brings.I would pass and try to get a small multi-family building or see if you can buy the whole motel(to have more control).