If you do, you should expect a very aggressive challenge by the IRS.At $350K of combined value it might be worth the cost to get a segregation study if you intend to keep these a long time.

How long for your spouse or partner?  

I've helped 6-7 different investors move money from Oregon to Wyoming in the last 15 years and they are all happy they made the move.Consider finding a market that has a better long-term outlook, economically and legally.

Not looking for long term rental in the basement so going through all the headaches of converting into legal ADU are not worth it. 

Hi Aaron - check out our lender page here on BiggerPockets - you can see info and a long track record of strong reviews: https://www.biggerpockets.com/business/page/49Also, sharing links to the 10-Part Article Series we published here on BP on everything you need to know about DSCR Loans - we are fully committed to transparency and providing info/guidance to the BP investor community!

One long-shot option is to offer a lease at something like $1,300. 

Personally, If I could pull out a HELOC, I would use it to fix and flip which will typically make sense as you shouldnt be keeping the money out for that long and you can recycle it or pay it back and build off the capital that you got from. the flip.

Large corporations are moving to the area which is very promising long-term for REI.

I took too long to get my property rent-ready, which led to a significant loss of potential revenue.

What are you looking to achieve in the short, mid, long term?