However, when I reviewed the property information on the PVA website, the records indicate it is a 3-bedroom, 2-bathroom property, excluding the 2 bedrooms and 1 bathroom located downstairs.

As others advised, get a structural engineer in there to review the conditions.

BTW, the rental property is cash flow positive.

@Dominic Holt , I am happy to review your scenario and suggest changes that could improve your property.

Main goal of All In One heloc or 1st Lien Position Heloc:  Lower your daily average balance.Main Drawback: Rates are substantially higher than 60% of current 1st mortgage balances.If you are mostly living paycheck to paycheck and your money leaves your account as soon as it comes in to pay bills, this is not for you. 

If you have favorable terms on those first mortgages, you might find that a HELOC or a second-position loan is more cost-effective than doing a full refinance or a DSCR loan.

I hope to use private capital to fund the entry fees in second position.  

However they do choose to live in CA for many of the positives listed by folks previously.

Getting the federal return correct is the most important and with owning two properties, there could be some positive tax benefits.

Pretty much any regular bank / lender is going to require themselves to be in first position on all the properties... so I don't think a HELOC type solution is going to work across multiple properties with multiple lenders.