I am asking this question of those who have done commercial deals and can explain the concept to me.  

@Bill Brandt: I believe you are misinterpreting the IRS's concept of a disqualified person. 

Given your interests in engineering related disciplines I would focus on financial engineering concepts and financial efficiency. 

You want at least a 30% margin above costs and the NOI needs to be enough to pay the debt service after stabilization and then some.If the project looks feasible from a financial standpoint the next step is to check with the city or county planning and zoning department to get an idea if your concept will work, if you can build what you would like to build and what is required for all approvals including site plan, building permits, proffers, water/sewer tap fees, bonding requirements, inspections, setbacks, lot coverages, parking requirements, height restrictions, C/O process and time frame for all approvals.You also need to check with the utility companies and get an idea of availability and cost estimates from them for water, sewer, power, gas, cable, installation and connection requirements, tap fees, hookup charges, transformer location and relocation, power line and power pole relocation issues.

@Jon Arsenault Sounds like you have a solid handle on it and I understand and appreciate the "life happens" concept.

If for some reason you get 3-4 homes in and cannot fill any more vacancies you have a little cash flow coming in without debt.As you fill it up and prove the concept you could exercise your option to buy.Just a thought

My advice for not getting caught up in analysis paralysis is make sure you learn one skill very well and get to master the concept, once you understand the ends and outs of the skill , it will become a lot easier to spot the opportunity when it comes to use it.Also I am local to your area if you ever want to reach out, Don`t hesitate!

[Note: the de minimis was $500 at the time they wrote this; it was later increased to $2,500]As the above example alludes to, the Tangible Property Regulations that include the de minimis safe harbor https://www.law.cornell.edu/cfr/text/26/1.263(a)-1 are centered on the concept of "unit of property" - a complicated concept that basically treats the entire house as a unit of property, with some exceptions.

It was an interesting concept.

Opened load-bearing walls to create an open floor concept.