If you go this route, negotiate so there's minimal impact to your income.

If you plan to buy another property in the next 12 months, your DTI will likely be negatively impacted. 

This will impact the cashflow potential of your investment.

The good thing about it is that it's quick and convenient for both yourself and the lender, the disadvantage could be that it might impact/increase your DTI if the appraisal came back lower than your actual current rent being received. 

The shorter the prepayment term has an impact on increasing the rate.4.

It works out greatLong term low impact tenant at higher then market rates.  

If it is a security, I've read quite a bit about Rule 506 exemptions and the impacts of having accredited investors versus non-accredited investors - what is everyone's experience with this?

Yes, the property was in service the prior year.Taxes have not been filed; however, I had enough expenses related to the property the prior year where the cost segregation study wouldn't significantly impact that return.

@Remington Lyman yes that's the direction we are headed, but do you think zoning will impact (if its marked as commercial, but used as residential??)

Personally I would pick option 1 because you cash flow is already high and so a slightly lower cash flow with higher LTV has relatively minimal impact on cash flow.