Based on the response you can pursue avenues to assist with your dilemma.  

@Maggie HamillTalk to your cpa but taxes are not based on what you borrowed but your cost basisIf you built two properties for $250k each and sold one for $500k then you had a $250k gain not zero (in simple terms).

My name is Rebecca and I have run Captain Save a Home LLC, Brew City REI Club (a private network of our trusted real estate friends), Brew City REI Training Cafe (ala carte style real estate mentoring/coaching) and Wisconsin Contractor and Handyman Club (contractor-investor connection platform) based out of Milwaukee, WI for the past 10 years.

Use a flashlight and check under sinks, including shutoffs, flex lines, and waste lines; around base of toilet and at the shutoff; tub to surround and other seam caulking; faucets that leak at stem when turned on; check ceilings in every room and closet for signs of leaks (bubbling, curling or bulging paint) or staining.

There's a high risk that you might find the tenant base in developing neighborhoods is harder on your properties and more sensitive to changes in the economy and has a lower rate of making on-time payments.

It seems like that building limits in terms of SQFT seems to be fairly standard (FAR based on zoning).

Hey JT,I recommend partnering with a builder on something like this.You can kind of JV the deal by putting up the lot and negotiating your way into either a percentage of sales of keeping some of the units once they're built.If you want to keep the whole parcel to yourself (which you should) you might just have to hire a builder outright to do the work for you.In Seattle specifically, you want to choose the builder based on the type of product they build.

You just take the total income of a property (usually just rental income) and divide it by the cost, which most lenders use what you said, the P&I + tax and insurance cost.Some lenders will take a look at the maintenance costs as well, but with a healthy enough DSCR that can usually overcome it.All that to say based on your original question, most lenders will vary a bit by what they would consider a ‘good’ cash flow, but 1.2 is pretty consistent.

What you'll require for a downpayment will vary based on location.

When I underwrite a property, as long as the tenant base in month to month, I look at the purchase price vs. the proforma or market rent for a quick indicator if the deal makes sense before underwriting further.