What I would do with the sale proceeds, as pointed out in your post, is reinvest in a first deed private money loan anyway.

Also mother in law suites and private bath are not as available.

What are the biggest challenges you face as a private money borrower?

because I'm thinking no one can really tell you when to sell your property, since it would be difficult to get a loan from a private/hard lender first off.

effectively, you'd either need to look for a lender that would let you use the other property as collateral (cross) so that you can avoid actually taking the cash-out (this is rare in terms of institutional DSCR lenders, but fairly common in the hard money or private money space)...

My second question is for future private money lending.

This would be better answered in a private setting with your tax professional to determine the best steps moving forward and structure.

Any advice for first time buyer on where to find private money and/or a good realtor/property managers in my area of purchase.  

Can we talk more in private message?

Be very clear with your lender rep about this point, and see what, if any options, are available with this outcome.If anyone would like a recommendation for a as-is based DSCR provider that I've had the most success with, please reach out privately.