Sounds like a minor hurdle to me.

Since up front cash was my biggest hurdle, and I wanted enough cash reserves for any issues that could arise, I the 4.25% option (the payback period for this decision was about 10 years.

The only way to beat them is to join them, which really isnt much of a hurdle in most states.

After running into a couple of hurdles in acquiring a loan for a multiunit building (I have an FHA loan and will need 20% down and 6 mos reserves to qualify for a conventional), I'm considering approaching a family friend as a possible private lender.

The zoning is the first hurdle, if correct then you can decide on how to proceed. 

Which, in turn, creates a bunch of compliance hurdles because CFPB QM rules focus on % of loan amount as the metric.If the advice in this thread hasn't gotten you an answer yet, google search "poorest zip code in Ohio" and find out who is doing those mortgages.

I think this original contractor is officially being unreasonable and honestly, he’s looking to get himself in trouble.

Another big non-cash expense is capex, so they're often surprised with a large unexpected bill every few years, whereas I treat it as an expense and segregate the money, making it look less profitable today. 4) return calculation - When looking at the overall return and hurdle rate, investors typically combine yield and appreciation, and in fairness that's the correct way to calculate IRR.

I would bring the seller down on that down payment, unreasonable. 

It's a balancing act :-)To a comment above @Luke Carl about vacation homes in Destin grossing at $160K, definitely great and not unreasonable for others to do those numbers.