I asked how, she said she cashed out all her 401k and index fund, and did private lending.

Hey there,I'm interested in utilizing private money lending for financing while I save up to use my own capital along with Hard Money Lending.

With excellent credit (800+), you're already in a great position, but I understand the struggle with DTI when you're self-employed.Here are a few options that might help:Asset-Based Lenders: You're on the right track with DSCR loans, but you may find some private lenders or portfolio lenders willing to go into the high 6’s.

Private Money.

Please share your thoughts:What are some of the most favorable terms you’ve negotiated with private lenders? 

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.

I gave her a virtual tour of the property via Facetime tonight and asked her if she was ready for a Minnesota winter, and she told me she's actually from Minnesota and moving back home. 

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

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)...