I believe the DLBA offers it to the next highest bidder.One other potential scenario is the winning buyer was willing to pay ~$100,000 for this house AND they are a city employee or has a relative that is a city employee.

Strategic geographical positioning near major Midwest cities further amplifies Toledo's appeal, offering investors significant ROI potential through both immediate flips and long-term rental strategies.

Minus potentially a small discount since it's an ADU?

Even though the cashflow is negative now, would it make sense to hold the property for potential appreciation ? 

Or minimize your mortgage risk by buying one property for cash or little debt. 

I'm not sure why my colleagues believe that "this does technically satisfy the requirements on paper" and discuss failing a potential audit. 

For more context, my current house and primary residence with the large amount of equity, was inherited, and I feel like holding onto it and renting it out would be a great opportunity as the interest rate I have is really low (4%), making it a really good potential cash flow opportunity.  

Purchase price: $225,000 Cash invested: $245,000 Older neighborhood with a ton of potential.

Investigate areas with strong growth potential and rental demand, and take into account regional real estate market trends.Networking: Attend local real estate events, sign up for internet discussion groups, and establish relationships with seasoned investors.

It might be a wash cost wise with much less risk and cost, and it would be a lot easier to sell later.