I'm frequently able to re-rent with no break in between tenants.

For every 1 landlord trying to do it right you can bet there is 1 that doesn't' care, just putting a body in.  

Hey @Caleb Reits - I highly recommend still mentioning Grand Rapids in your title and in the body of your post.

Currently the rent covers the payments on House 1 and it is close to break even from a tax perspective. 

Depending on the market ideally the property breaks even or provides a good COC return. 

Break the project into a trade driven SOW and start assigning $$ values to each trade.

This should be easier than most lot splits since the piece you’re breaking off doesn’t need to be a legally buildable lot in it’s own, it could be added/incorporated into your neighbor’s parcel if necessary.  

Does anyone have advice, suggestions, or experience finding and breaking into a new Emerging Market?

I review about 1,000 a week nationally and we are lucky to get 5 plus cap rates with investment grade tenants and debt in the 3's fixed for 10 years with 30 year amortization putting 30 to 35% down.Developers build STNL break even for about 9 cap and have about 100 basis points resale cost down to 8 cap and sell in 5's for about 200 plus profit spread.NOW multi-tenant retail centers that are not brand new with a mix of tenants you might find some luck in the 6's to 7's for cap rate.

Some places also defer licensing to the relevant industry regulatory body (etc: EPA for HVAC).