Someone who is intimidated by it might not want 2, but probably doesn't want 1 either.The risk in the two portfolios is inverse to each other since we don't know anything more about either alternative.

If you're not a W-2 employee or have additional income you can try an alternative income verification such as bank statement deposit averages or asset depletion (if you have significant reserves or assets.) 

As an alternative, it's much easier to install  vinyl tile.

Alternatively recognize the challenges of being cash neutral at high LTV, the benefits of no longer paying a LL rent, that rates may lower such that you can refi, that over long term there will be appreciation and rent growth so it will at some point have positive cash flow, etc and lower your initial goal of cash neutral. 

I suppose I'm looking for any advice on how you found an alternative to hard money. 

We could sell the old house and net at least $175-200k (after costs of selling -- this is a hot market) and would put that toward the new mortgage (reducing our monthly payment and interest costs).Alternatively, we can rent it at an amount that covers mortgage, taxes, and insurance, but not much more than that.

Does anyone recommend a deposit alternative insurance company?

I know that ADU's was an alternative to building from the ground up.

But it does have to be investment real estate.There is an allure in the thought of taking money out of real estate and placing it in "safer" investments. 

An alternate perspective from someone in a larger city market - I am hesitant to put my STRs on Google maps.