With only 5% appreciation factored in (to be conservative), my ROI on my 20% down payments is around 80% on all my properties.

Maybe if you're lucky you were able to negotiate with the other tenants to get those units up to market rent as well, further pushing the value upwards (of which there are a few tricks, although the deal would need to make sense without this factor as it is not guaranteed.

Yes, but you need to narrow it down a lot to have a coherent answer.You will have to look at (I'd recommend in this order) the city codes (if it's inside a city, many cities above 50-100k population aren't friendly to development of these), the county codes (most counties are friendly to these, but you will probably have significant issues in major counties like Bexar, Travis, Dallas, Denton, Tarrant, Harris, etc), then you will have to comply with the state-level (TCEQ and others) on the water supply and waste water treatment systems.To put it in perspective again, in say Dallas or Austin, you will likely have prohibitions or very significant hurdles on developing RV or tiny home properties even on unincorporated, "unrestricted," AG-zoned properties at both the city/municipal level and county level.

In regards to tenants already being in place within a unit - my encouragement is to not worry too much about this being a LARGE positive factor.

This is usually the determining factor when calculating deals and knowing if it’s worth it, but I don’t even know where to start.

If it’s a ten cap after all cost factored in and 4% interest rate your return for 25% down with 0% appreciation is 28%.

@Matthew PurvisWhether you owe Uncle Sam for taxes depends on a number of factors.

This will depend on a lot of factors like how many units there are, if it is owner occupied, etc. 

Since you weren't the owner and never foreclosed how you factor into this, where is the original owner is this, etc.

The other factor here will be your income - it'd need to be looked at.