As others have said, the best thing to do, is to remind people that noise travels.The problem is that many people, go from a house, to a condo, they assume its going to be just as queit.Then once they hear a very minor footstep, suddenly all hell has broken loose, and they cant live there any more.People are soft, very soft, and need to be reminded of reality.Too many first world problems

An investment makes you money, which means you get more money coming in than going out.The trouble is, you have to count not only the hard cost to buy (price, rehab, etc... but also the soft costs to operate (insurance, utilities, etc...). 

I think ADU's are a great option for the buy and hold investor to maximize cash flow since you already own the dirt so adding units only has the construction cost aspect (and some soft costs associated with that).

If the market is soft, cap rates go up because buyers aren't willing to pay as much for the income stream, usually because they think that the income stream isn't going to go up much, if at all, or might even go down.  

With ARV at 135,000 at a maximum loan of 70%, you can borrow up to 101,250 which means, in this scenario, you could get the 85% of acquisition and 100% of rehab, i.e. total loan amount of 83,750 with an initial release at close of escrow at 63,750 which is 85% of acquisition, and, the rehab holdback of 20,000.15% of the 75,000 acquisition down is 11,250 and closing costs are likely ~3,000 so you initially need ~15,000 to closeAfter close, a prudent hard money lender will require reimbursement style draws which means you must first complete at least phase one of improvement/rehab to the property before drawing down on the rehab hold of 20,000.With only ~5,000 left over after close, you don't have much room for soft costs like utilities, nor much room to get the rehab started, nor much room for the monthly debt.

Their reservation is a soft reservation, because they didn't want to pay the deposit to hold, which is non refundable.

Missing some soft costs like repairs and capex. minimum of $150

How did you arrive at your soft cost numbers.

As an aside, the soffits are now vented and soft-story ordinances in the area are for 5+ units.

I hear the condo market is soft right now, so it's a great time for you to kick things off!