For me I think it depends on how much money you have invested into the home and for how long?  

Covering the mortgage isn’t an issue, but I’m considering factors like: Multi-Family: House hacking would help offset costs right away, but I’d likely need to put money into renovations upfront.Single-Family: Easier move-in with no immediate renovations needed, plus potentially lower tenant turnover once I rent it out For those who have been in a similar situation, what did you choose and why?

I only plan to manage these two from out of state until we're able to refinance our second home as we're losing money on this particular house for rent as we bought this home last year. 

During this time you are not generating any return from the money invested in the ADU.

So even if you had a buy out agreement negotiated up front and execute that buy out agreement, the bank would still require him to be guarantor unless something drastic changed on your side financially.The best scenario here would be to purchase and rehab the property using a hard money lender or bridge lender.  

@Geoff Engel If you don't want to be a landlord but still want to be involved with investing you could be a private money lender for flips or in partnerships and bring the money to the deal.

A couple months ago there was a guest on the BP money pod that said something I really liked, "put your risk in your ROTH" and by that he meant that if you're going to invest in something riskier that has the potential to have large returns, put that in your ROTH account because you're only taxed on what goes IN to your ROTH, not what comes out.

They are worth the money for a good hot tub that is mentioned all the time in reviews and doesn't have a ton of issues.

Are you having trouble cash flowing with your current insurance ?

If you can get a better primary residential HELOC rate than you can a hard money bridge loan I would say yes.