If I were in your and/or your mother-in-laws shoes, I would go to a local bank and use the free and clear house to secure a $150K+ line of credit. 

The next meetup will be February 23rd at Kirby Ice House! 

The idea of raising funds from new investors to get them involved in selling lease option houses to tenants does not pass the sniff test.In a nutshell, this is why lease option is so terrible.

So the line is a shared private line between the 8 houses. 

But you also SHOULD have some vacancy and some capex on an 80 year old house. 

As I'm sure everyone knows, the housing market is pretty locked up right now.

There is a single family home in front, and in back there is a guest house/loft above a garage.

I missed a lot of flaws in that house and I had some painful years as a result.  

As for valuation, I see no reasons why a Junior ADU would negatively impact additional housing unit.

Option 3: Pay large down-payment on modest rent ready house.