I appreciate it If you decide to approach your tenant about them purchasing the property I recommend you contact a mortgage broker first to let them know what you are considering  Your objective is to get an idea on what the potential rates they may charge your tenant when it's time to exercise the option to purchase. 

Note: I am under the impression that me material participating in this exercise will fall under the "Real Property Development or Redevelopment" activity, thereby allowing me to cost segregate the home construction cost.

You can potentially qualify for a regular rate & term refinance of the 91k loan (plus closing costs) within 12 months.  

@Andrew AcunaPlenty of arm chair investors that don't know the difference between a shoe horn and shoe molding.Regrettably the majority of tenant problems are created by incompetent landlords.You have read the posts....my tenant regularly pays late.

Better tenant selection and regular inspections will stop this from happening.

Would you then say AIO is better than the regular 1st position HELOC?

Regular channels for mortgage will not work....

Any RE agent advising to you that this is an option that you should exercise in order to better afford a home should have their RE license revoked for violating their fiduciary responsibility to you as a client.

If so, we finance SPEC builds on a regular basis, both single unit and multiple/subdivisions. 

It's not any specific form, it's the regular monthly/annual report from your PM.If you're self-managing this project, then you need to give your tax guy a detailed list of your expenses.