So for a mid-size multi-family would they base it on down payment and income it produced?

Including the tax benefits of certain real estate assets you should be able to produce a 6-9% blended return at this time in the market.3.

Has anyone tried the following strategy: (i) use own funds to build or (ii) buy below market value + rehab; in any case resulting in a total cost of about 80% of market value.

Why list your property with someone who who doesn't have answers to the questions that are going to result in a profitable sale for you? 

@Joey Clairessa M.You can get a house 'under contract' without paying the current owner and money .... but it's not completely free, you'll probably want your contract reviewed by a lawyer, and you'll want the contract notarized.Also, I think it's worth mentioning that you current owner will expect that signing of a contract will have the eventual result of them getting something (money).  

What activities/tasks produce the better results?

The Allegheny County Real Estate office produces a CD every quarter of all the sales in the county for the last three months (along with loads of property information).I use this data to see what's happening in the areas that I care about.  

You invest in real estate and you have an infinate potential for loss.on the flip side, 40k in mutual funds/index funds will take much longer than 15-20 years to produce any reasonable income. 

Use that to make contacts and learn the market and inventory, while producing a steady income.

One problem with extensions, if the BPO gets to be 90 days old before closing, which it shouldn't in your case, it will expire and the bank will order a new one which will cause a delay, and could result a higher approved price.