Given that CA doesn't conform to federal bonus depreciation rules, you'd be looking at a max tax bracket of 24% fed and 9.3% state, so already their estimate is high.

So, to free up FHA option for next purchase, you will need to refinance to a conforming mortgage at some point and THEN live in the property for another 12 months.You could also refi to a non-occupancy mortgage, conforming or DSCR, but you will need 20-25% equity to make that happen.You could build up the 20-25% by:1) Buying below market2) Buying ugly property and using FHA 203(k) to finance improvements, then get the work done (probably better when you're out of school for summer) within the allowed 90 days.3) Pay down the mortgage balance with accelerated payments

Let's try to logically reset your expectations:)https://www.fanniemae.com/research-and-insights/publications...https://www.freddiemac.com/pmmsFNMA and FHLMC are US government entities that, keeping it simple, set mortgage rates for conforming mortgages.

Appraisers do call city building departments regarding conforming and non- conforming buildings.This sounds as if the addition is obviously non-permitted.

Commercial lenders typically have seasoning periods—they don’t love seeing the owner take out more debt than the acquisition amount within a short time after purchase.If you’re not confident that you have a conforming/DSCR lender who’ll allow a cash-out refi after you lease it, make sure you find one before you pull the trigger on the take down.

1) MORTGAGE OPTIONS: you are unlikely to qualify for a conforming mortgage, due to 1099 making you self-employed for less than 1 year.

Is there any room for negotiations with the town on grandfathering your existing as non-conforming use and having this apply prospectively? 

I've discovered the property is below the 6000 min sq ft lot rule to conform to Lehi's ADU requirements.

Here are some things to keep in mind:1) Make sure you’re running truly conservative numbers - assume higher vacancies, real repair and CapEx costs, rising taxes and insurance, and rents that are realistic, not just what makes the deal look good on paper. 2) Take the time to learn local zoning, rent regulations, and code rules before you ever make an offer, especially around NYC where non-conforming or illegal units are super common and can completely derail a house hack.3) Talk to a few investor-savvy lenders early and really understand your low-down-payment options (FHA, conventional owner-occupied, grants, assistance programs) so financing doesn’t slow you down once you find a deal. 4) And finally, build relationships with an investor-friendly agent, a CPA who works with rentals, and ideally a mentor who’s just a few steps ahead of you.

Investors & house hackers — turnkey cash-flowing property in South LA with tenants in place.The Numbers:Asking: $779,000Current income: $4,250/month ($51K/year)Front unit (2bd/1ba): $1,650/mo — leasedBack house (3bd/2ba, built 2019): $2,600/mo — leasedGRM: 15.3Cap Rate: ~5%Sq ft: 2,275Price/sq ft: $342 (well below $488 neighborhood avg)Upside:Non-conforming studio attached to front unit with own bathroom & kitchen.