I am looking for any input on how to structure this deal and make both sides feel comfortable with the amounts.

Just because you add an ADU doesn’t mean it’s going to add enough value to recapture that $300K.If it sounds slightly out of your comfort zone a simple conversation can be extremely impactful Thats where breaking down the payment management tools, local experts on small repairs, credit and background checks for renters, all comes into play.

See what you're comfortable with and then you just gotta commit to narrowing yourself to 1 or 2 markets or you'll be in decision paralysis forever!

In a more competitive environment, you need to make your property stand out to capture the limited demand.

It sounds like the appeal here isn't the deal but the ease/comfort of finding/making the deal.

There is no point in buying a rate down in this environment, take no prepay or short prepay option, then refinance when rates drop, no need to spend the capital when it is clear we are headed down in the nearing future.

You are comfortable with the risk associated with leveraged investments. 

In a “nutshell”What can work - partnerships where each person brings a different necessary asset (knowledge, experience, time, capital, credit) to the table, the responsibilities, rewards, and expectations are clearly spelled out, legal documents are created to head off disagreements, and the parties are compatible.What doesn’t work - partnerships formed by two or more inexperienced people looking for “comfort” rather than going it alone, and anything other than the above. 

Definitely not afraid of the work - just happy to have a path forward and to know that you think it's possible in the current environment.

Even with nonconforming, can it truly be a comfortable bedroom?