His self image needs to be adjusted: how he thinks of himself. 

What you are talking about are adjustments in value for an extra bedroom or more sf.Here is what I tell young agents: run a market for a brand new listing and try to determine for how much it will sell.

I am not going to prison for that chance so ultimately I checked and adjusted my thoughts and thinking of different opportunities!

Factor in Management (10-12%), even if you plan to self-manage at first.Your future projections need to be adjusted.

Many multifamily (and other) investors feel that the prices are high and some adjustments will happen soon.

The more you know, the higher your net risk-adjusted returns will be.So to answer your question, "how do you propose I pay off the variable loan?". 

In CA you would need at minimum a Lot Line Adjustment plat...in SoCal that would run you $10K-20K plus City/County fees ect.

All your screening criteria can remain the same, except you need to adjust how you calculate income. 

Scenario: Purchasing primary residence with the intent to flip/hold & rent(still ..researching)~40k cash for investment purposes(rehabbing, etc)Portfolio loan option 1: 24 year 3.99% fixed, no dp, no pmiPortfolio loan option 2: 30 year adjustable after 10 years 3.49%, no dp, no pmiTraditional option: 30 year fixed 3-3.125%, will require dp, possible pmi.Ideally, we want to preserve as much of the ~40k as possible for rehab purposes.

If it's a good deal, just factor this in and adjust the repair costs if needed after the inspection.