I love this idea, but would first talk with your ciry to determine the building regs.Have you done any comparison to see the cost difference than just building a typical multi-unit property with small units?

After analyzing the deal further, estimating holding costs, realtor fees, monthly costs on hard money, estimating the worst case scenario of it taking three months to sell (average time here is 43 days), rehab costs, insurance, etc., I am pretty sure we need to pull out. 

DSCR is a better option on rates and cost compared to Fannie and Freddie loans.  

It has a population of about 90,000, and it is a much higher cost housing market than Albuquerque (incl Rio Rancho).

You can try to incorporate a seller concession to help cover closing costs and reduce cash to close.

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years.

Those factors don't even take into consideration the cost to prep a unit at turnover and possible placement fees paid to an agent to find a replacement tenant.

I had a rent-collection setup on Azibo for $1850/month, with an $1850 security deposit.

It also is worth approximately $140k more than my property is currently worth.My question: when evaluating renovations, is the math as simple as (Additional rent expected per month due to renovation * 12 months/yr)/total cost of renovation = ROI.

Age of construction may not be a huge issue if it has good bones and can benefit from a fairly cost efficient "In & Out" remodel.What is stopping you down payment?