It's my understanding that if the 2nd/HELOC is taken out for home improvement purposes, which it would be for an ADU, I am able to deduct it on my personal taxes.

I would suggest exploring a cash out fixed rate HELOC or fixed second.

2nd question...so even though you're not doing an initial purchase and trying to take out the equity in the property, does a dscr really make the most sense or does something like a heloc do better?  

I have a STR which I renovated using a HELOC on my primary home.  

Used a heloc on primary to buy first rental, i want to convert rental to a 30 year mortgage so I can use heloc again to buy 2nd rental.

Again, competitive rates (much more so than HM or HELOC) and still have your money working in two places at once.We recommend #1 since we try to leave banks out of scenarios if they aren't absolutely needed but it is possible.Just some thoughts if you decide to liquidate a couple properties and happen upon some cash.Reach out if you have any questions.Best wishes!

You could find an investment property HELOC for your current investments and use them to essentially by a property all cash to BRRRR and pay off the HELOC when you refinance.

I am using a Heloc to fund my real-estate purchases and also to cover the rehab cost. 1.

One way to capitalize the down payment could be leveraging another property with a HELOC (home equity line of credit) or fixed second rate mortgage. 

I have been searching for a bank that will do HELOC on a rental, and so far, the only one I have found that could work is Better.com.