I checked with a couple of  architects, both of them preferred to take a bigger project.

A major renovation like this will take months and the market will most likely be lower than it is today.

Returns can be much bigger than 10% (at least here), especially if willing to take 2nd position.

I usually think of vacancy rates below 10% as pretty good and under 5% as really top-notch.

But usually the pure waters facility can handle the flow and treat it before Lake Ontario gets it.

If I were to put down a 3.5% down payment and pay the monthly mortgage with the ~$300 insurance fees, is this a better route than putting down 20% in a conventional loan?

Stephen - if you have the scope, itemized invoices and pictures I’m happy to give you my thoughts on if the work was justified or not ( I’m not saying that them doing unauthorized work is okay) I’m assuming deposit was more than $1k. 

Any time you are trying to put a bathroom in an attic or basement, it is going to be harder than you think.4.

Quote from @Marcus Clouse: It all boils down to lot cost and mainly sub contractor costs.I just did a breakdown of costs from michigan vs texas where I build now.The framing package is basically the same either state. way more than land cost and subcontractor cost

In addition, the rent is capped at the tenant's income and the local market rates, so it may be less than you would receive from a tenant who is not a Section 8 tenant.