You also avoid lender/broker overlays which are handcuffs in the finance world. 

Hello,
Im working with a lender to refinance into a Fanny Freddy mortgage now that I have stabilized my 36 unit complex.
They have asked for a CAPEX schedule, and a T-6, in addition to the rent roll. 

I imagine a...

Even in HCOL areas, adding an ADU typically does not make sense because developing a single small unit is the most expensive residential development that exists.Adding an ADU is a lot of work (probably more than a brrrr but with worse return), has poor financing options, typically adds less value than the cost of the addition, and detracts something from the primary structure even if it is just yard and privacy.Good luck 

.: I have an applicant who's going through a rental screening process A.T.M.

I always play it straight on loan applications for they can be enforced for 10 years from signing. 

Ignore seller finance for a second...Can you buy a house, put 20% down...yes.

How many applicants did you interview?

Sometimes I've heard of PMLs doing "creative" financing like this where maybe they do a very short-term loan that can be paid back once you sell the land.

If the applicant comes from the pool of people that I or my tenants know, I use real estate as a way to give back as many of my tenants will not qualify credit wise or may even have a criminal background or would struggle for another reason if I were to just stick to the "background/credit check" criteria. 

Proc. 2002-69, 2002-2 C.B. 831, for special rules applicable to husband and wife state law entities in community property states.