Is he that bad at screening tenants or is this house a magnet for bad apples and what will it cost to improve enough to attract quality people?  

(see recent GAO Report: Improved Guidance Could Help Account Owners Understand the Risks of Investing in Unconventional Assets)The private investment sponsor is the one that will need to provide this valuation.

Gerard,Dan is correct, I believe you are looking at syndication firms that pool investor money (investor is a limited partner in the deal) and the syndicate group does all the work finding, acquiring, improving and managing the asset with the goal of earning attractive risk adjusted returns.  

My husband and I are having a difference of opinion as to the value of these improvements.

Then, they listed the fix up costs on Zillow and not one of those improvements even paid for itself.

So I plan to rent the bottom unit and finish the attic and do some other improvement while I live upstairs.So there is a little background and here is my potential problems.

If the Buyer is improving the property, which your post doesn't say, then there is some hope.

If you are confidant that you could pay both, and still cash flow a profit, then your return will only improve after you finish paying the 2nd note off after a few years.

Usually the realtors know exactly what price houses can be sold for after the improvements.

I take a mortgage out for 300k now and start to pay it off while I improve the property.