Look at new construction triplex/duplex condo sales in the heights areas, subtract carrying cost over build timeline, materials, labor and construction costs, what their desired profit in heights deals would be and that would leave you with approximate acquisition cost of the lot. 

Obviously if you have unlimited cash then sure, don't do it but for 90% of people it is the cost of doing business. 

Combined this leads to high cost of leveraged purchases. 

Could be a low-cost loan or seed money equity stake rather than a gift to be more "fair". 

If you are looking at this decision through the investment lens, what would you net on the investment that you put this money in to, after transaction costs and taxes? 

Whereas I don't know if it will make up for the cost of software when only renting. 

If you were not, you’d save the same taxes as strategy 2  Or 2) You’re going to spend money (capex) that will be added to your cost basis giving you a higher yearly depreciation.

Let's assume you don't take a loan.Purchase Price: $1,299,999Closing Costs: $25,000Renovate unit: $35,000Build 2 ADUs: $250,000TOTAL: $1,601,000The cashflow calculation looks like this:Gross existing rent: $5,600Gross rent from 4th unit: $2,500Gross rent from ADUs: $3,000TOTAL GROSS RENT: $11,10020% Expense Ratio: -$2,220Property tax: -$1,354TOTAL EXPENSES: -$3,574NET CASHFLOW: $7,526So, about 3/4 of your $2M budget gets you to about 3/4 of your $10,000/month goal.

Condition of a property and the cost to repair is just one of the risks in this business and you have to consider that in your buy price. 

Very little out of pocket cost.