And they wonder why there isn't enough housing in these blue states. 

Need more information surrounding why your current lender is suggesting they cannot utilize the rental income on your investment property.

@Weronika Jedrak, I just found this thread and am wondering what your experience has been.  

An uncontested foreclosure is often the best way to resolve issues with subordinate lien holders though I've also contacted some and explained they were about to be named in a foreclosure and suggested that could be avoided if they just released the property from their judgment/lien.

@Jonathan Greene I'm not sure what you mean by "most will not cash flow as an out-of-country investor" as it might suggest that the cash-flow of a given property has something to do with the nationality or residence of the owner but, in any case, you're absolutely correct that, historically, the net rental yields of LTRs in US cash-flow markets like the Mid-West have been typically higher than in the average European market, although that wouldn't be the case for many other US markets like California or New York.

I suggest next time you make sure that you have enough money for a deal before proceeding forward. 

@Jeremy H Barton I would suggest taking a look at your cash flow before signing up for a HELOC on a brand new building.

Internet search ADU lot split “San Jose”Here is one search result that is what i am suggesting: https://www.reddit.com/r/SanJose/comments/1e7lhkv/san_jose_b...Good luck

I'm wondering how do you all screen your tenants?

If all that happened I suggest you start including dryers with the properties.