Are you anticipating market appreciation with an exit in a few years or is this the start of building a sustainable portfolio aimed at cashflow? 

If not, then, you have already anticipated that outcome.Bottom line:  Develop your exit strategies using the most conservative approach (higher rates).  

This could be a reason why the price is higher than you anticipated.

How much proceeds do you anticipate from the sale of this property?

People are excited about that because of the anticipated job growth and desirability that may bring..

Know your subject matter inside and out, anticipate questions that can arise and have your response so that it is instant, without hesitation.I know I'm rambling but stick with me here, body laungage and facial expressions are improtant too.

He said that the annual return you anticipate for your investors needs to be at least equal to the rate of inflation in order to match/beat inflation.For example, if inflation were 10% per year and his return structure had only a preferred return with no split, his argument would be that the pref needs to be at least 10% in order to match or beat inflation.I question if this is a true statement.Example: If inflation for example is 10% per year, and I have $1M in the bank, that money has buying power of $900k at the end of the year after being inflated away. 

Took a little longer to rehab than expected replacing cabinet doors is more difficult and expensive than original anticipated.

You would replace current revenue relatively quickly with fewer furnished units providing the furnished demand is what you anticipate. 

If it is investing 20% of the $2M (or $400K), and he is looking for at least a preferred return of 10%, then he should be getting at least $40K annually of the resulting cash flow.I don't know what your anticipated cash flow is, but let's say it's $60K.