I agree with @Anthony Ciulla that getting proper permits after completing construction is typically not easy as inspecting things to verify after completion is difficult.  I

you might run into difficulty if using a lender because of the current occupancy.

The difficulty in a cap rate being applicable to small investments is in the development of the cap rate used, it requires the analysis of alternative investments of similar size, risk, marketability and return, that is more difficult to obtain in real estate as all projects are different.

Another concern I have is how difficult is it for them to get financing for an FHA, VA, or other federal loan programs if we double close due to seasoning restrictions.

I would encourage you to be sure and listen to the podcast specifically #48 the most recent one, just be aware before you go in looking for a section 8 property they have their own set of challenges and difficulties...

If this is a annual lease you may have some difficulty raising the rents immediately.

This is for an out-of-state owner which makes showing the property more difficult. I

Looking to get my first deal, something came up thats on the 3rd floor. How much harder is it to rent a unit on the top floor? Cheers!

Like yourself, the States looks very attractive, but as a new investor, I think it makes sense to stay above the border to take out that added layer of difficulty. 

How difficult is it to transfer title from LLC 1 to LLC 2 and LLC 3?