If I have to pay for a child's college tuition bill of $50,000 I can't do that with the equity, I'd have to convert that equity to cash.

I've included an example below to help illustrate this.So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.See example below:DSCR < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23There are 30 year fixed terms and other options such as 40 year with 10 year interest only converting to a 30 year fully amortizing loan. 

What would be the benefit for an investor to convert a contract for deed to a mortgage?

My thought is to approach her by saying that my original plan was to purchase the property and convert her unit into Section 8 so that I could get the $3,200/month rent -- but since she's a long term tenant, I would be willing to forego that plan and tell her she can pay $3k/month to stay.What are your thoughts?

If you sell your property, you can exclude some of the capital gain with the section 121 exclusion.There is no reason to use the exclusion if you don't sell.When you transfer your property to an LLC you don't have capital gain either.The only situation when it may make sense to capture the 121 exclusion in advance is when you convert your home to a rental, and you know that you will sell it in more than 3 years and you have substantial capital gain in it.

Every time I have analyzed converting one of our LTR into a STR the numbers have always looked better as a LTR. 

It's the best you can get and they track actual leases in your market, not what Sally thinks she can get for her converted garage. 

Have you considered converting either property to an STR or MTR?

Hello, although I do not have experience in converting Industrial to Residential Units, I would say, understand what the Building Dept. requires to make this feasible, for example, some jurisdictions require that each unit have one covered parking space (carport/garage etc.).

Hi Carlos,Have you considered converting your unit into a STR and MTR?