Many of the cities on your list are in the Southeast, which is perfect if you want to bet on appreciation but not that great if you want a steady cash flow, if your goal is to generate some passive income target the midwest, and stick to solid suburban B areas, don't make the same mistake as many other OOS investors did chasing high double-digit returns in C-D areas, these returns only exist on paper. 

We're looking at properties with existing illegal suites and converting to legal, or suiting out a basement.

How do you determine whether you are better off rehabbing the existing property vs demolishing it and starting from scratch?

It shows how much demand exists for the operational cash flows produced by the property. 

It is also my belief that many investors do not understand the various investment options that exist and the associated returns especially the risk/return and the passive/return relationships. 

The bed/bath count can also contribute to an increased appraisal if you are able to create such out of the existing space, or do a add on.Hope this helps! 

Period.However, here is what can be different from lender to lender...For example, we will allow a signed letter from one of the existing tenants, stating that they are terminating the lease early and vacating. 

@Melyssa Peronto These lenders don't exist unfortunately.

Obviously your CapEx will be much lower in years to come, but have you ran the numbers of fixing up an existing duplex rather than building a new one?  

The fourplex only exists because the zoning has been grandfathered in, on paper it is R2.This is my understanding of how SB 330 would affect my project:If I raze the building, I can't build anything less than four units ("An affected city or an affected county shall not approve a housing development project that will require the demolition of occupied or vacant protected units, unless all of the following apply: (A) (i) The project will replace all existing or demolished protected units.)Additionally, because the units exist under rent control (market rate), the rents of the new buildings in the future must also be rent controlled.