I was making one assumption too many.  

Etc.My assumption of what the cost to rehab this building I think is more than I wrote into my original numbers.

Notably physician loans can be up to much higher amounts than my current income since the programs run under the assumption of a dramatically increased income post-residency.

Many believe unrealistic assumptions and often apply those assumptions to the wrong property classes.In our OPINION (always verify yourself!)

The last thing they want is to buy an asset based on the assumption that they will get market rents, only to have the city come in and re-control the rents at the old below-market prices, because the de-control was done improperly the first time around

However, I love to continue to challenge that assumption and am always open to new viewpoints! 

As has been posted elsewhere - you need to be really careful when using any of the "Rules of Thumb" espoused in REI - 50% Rule, 1% Rule, 2% Rule etc.Use these Rules of Thumb as screening tools to know if a deal is worth looking at a little more closely.Once you get into the level of due diligence that the OP is asking about, you're breaking down the underwriting into each specific line item, based on historical operations of that actual property, or on your assumptions about the current "market" rent, expenses, vacancy etc.

What does his case study look like with truer assumptions (higher debt rate, stagnant rent growth, rising cap rates) and rising hits to NOI?

You are right that the next buyer has to be able to underwrite to a profit, so all acquisitions need to carefully consider exit cap rate assumptions.  

So it does appear to be possible to get an FHA 203k loan for a 5-unit & convert to a 4-unit.When possible, aim for the Limited (aka Streamline) 203k loan, as it's less complex, not required to get an FHA consultant, etc.Of course, this is based of the two following important assumptions:1)  zoning allows for this2)  and obviously I owner occupy for at least 12 months3)  the total purchase price + renovations are within the FHA loan limits specific to my areaWhat I'm confused about is the timeline or chronological order of the process?