This is an added level of privacy.

Liam,I think the laws are borough by borough; however the level enforcement can vary. 

Now I'm also a GC so my build cost may be lower than somebody who needs to hire a GC.

I will just inform the tenants to keep their stuff on the first and second level while they finish the bedrooms upstairs. if there is a delay hopefully it will just be 1 day of not having access to the bedroom.thanks again for the advice I'm sure you all just put money in my pocket by keeping me from putting carpet back down.

I believe it tends to give me a slightly lower return, because the sponsor is going to be more careful, and if there is a severe downturn will prevent me from taking catastrophic losses.

While it is difficult in Texas especially at a lower price point, call a local title company.  

Being that an FHA  loan is a government guaranteed loan, only available to Investors who are househacking, it offers a lower down payment and an optional seller assistance. 

If you know a commercial agent that can find sales comps in your area at a lower cap rate you should be able to show appraiser the value.

I have done a few deals and consider myself intermediate level.

Pros to this approach would be lower starting cost (I am still saving up money for a down payment) and not having to deal with tenants.