They tend to be cheaper per sq ft than houses and command more rent / acquisition $.The big thing I look at in an HOA is financial stability.

The longterm plan would absolutely be to renovate, remove some walls and divide the main house into 2-3 bedroom units that would command higher rents and a better clientele. 

Properties there command a very high premium for their proximity to the city.

I understand the agents point about having both for resale value and for commanding higher rent, however the deals just aren't making sense.

I think many homes were just being tossed on VRBO without much professional touches and to @Mitch Davidson point many of these homes do not resonate or are able to command a higher price point.

. $100k property commands $1000/month rents)Assuming you are wanting to make your profits from cashflow, 850 is too slim.

What rents can you command with a desirable unit three or five years from now?

If you finance this at 3% as an owner/occupant with a 20% down payment, then you would generate an ROI in the 20% range on your invested cash.If you go with an FHA loan and much smaller down payment (as little as 3.5%, though you'd have to pay up-front and ongoing MIP mortgage insurance), then the ROI would potentially be much larger and your loan would be assumable, meaning it would help you to command top dollar several years down the road if rates happen to have risen.

Total 3 homes, all have no pics, and one looks bogus ($500k is probably $50k):https://www.redfin.com/city/5665/MI/Detroit/filter...Let's say you can command $100/sq. ft, that puts you right at $130-140k, which is still a great BRRRR candidate.

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