Also, pretty much throw out the sellers numbers and do your own based on market conditions.

Little bit of a learning curve because you can customize reports and analysis based on your own equations but once its setup, its very effective and works great.James Storey, CCIM 

They are investor-friendly mortgages that qualify a deal based on the rental income and do not look at your DTI in any capacity. 

Based off comparisons in the neighborhood, the house should be worth anywhere between $175,000 and $215,000.

Lastly don't base the "party situation" off the old PM.

@Karthik Jayaraman Based on your math, it looks like you're losing $915 each month, which can be a significant amount for many.

The question is, how do people find these connections if it’s an area outside of their original home base?

A DSCR loan (Debt Service Coverage Ratio) type loan would look at the rental income and expenses and determine the amount it could lend based on that.

Best to consult your CPA for the most relevant advice based on your state's regulations and tax implications.

It all depends upon the total cost of construction, based on that your monthly fixed cost/mortgage will come into picture.You cannot rent too far from market rate, essentially you should have some spread between mortgage(construction cost) and rent to cover for cashflow, vacancy etc.I would suggest you to keep the selling it out as your second exit strategy if renting is your first one. in that case your construction cost + selling cost cannot be more than market price of new construction.You can also try to reach out to developers to give them a piece of the pie but then you will have to sell for sure.