South side/north side typically have lower property values with competitive market rents.

We should definitely link up.I found the same thing to be true of AirBnB, we have operated in Chicago for almost 6 years and the laws have steadily made things more cumbersome to get a license and operate a short-term rental business.   

Use Excel’s IRR function to calculate this by showing the investment contribution as a negative number in the first column, then the cash flow from operations, refinances, and sales proceeds (added together) each year in each adjacent column.

I've typically only had experience with conventional lending however this time around I'm exploring the DSCR route.

The loan will be typically at 65% of that ARV and money will be given out as work is completed (draw).  

He primarily operates in the Baltimore City market.

Additional costs like HOA dues, neighborhood maintenance funds, and property taxes over the duration of the build should be factored into your financial strategy.The foundation of any successful partnership lies in a robust operating agreement.

So the above, is directly in response to your question/strategy BUT, I would certainly consider NOT SELLING THE LOT NEXT DOOR... especially since you said you're seeking 'additional cash-flow' -- if you sell, it won't be recurring cash-flow instead it will be a one-time infusion of cash into your bank account and then its done AND you won't have much control on what happens next door aside from what restrictions you have placed in the deed... why not instead of selling consider... offering it as a 'ground lease' whereas, the person seeking the lot is allowed to build on the lot but then will pay you rent for the use of the land... this would be similar to some commercial agreements or even mobile homes where the tenant owns the structure but you own the land on which it sits on.. it's also quite similar to how McDonalds and some other franchise businesses operate it's how they are able to ensure that the properties being built are built and operated in accordance with their vision, if a tenant does not build it or operate it 'correctly' then the Landlord will have leverage in ensuring that it is rectfied... because after all you do still own the land and may terminate lease if the terms are violated. 

What is typical in the neighborhood for the sale price of the home?

I'm looking for a manager who is strong operationally and is willing to provide input during the underwriting and due diligence phases.