BUT, I am confident that while the above covers MOST situations, in a country of 300 million + people there are locations where a 12% ROI exists for a car lot - though you may be giving up the “windfall” of a developer wanting and willing to pay a premium for your lot.  

I wouldn't touch arbitrage with a 10 foot pole unless it was a super unique property and situation with an owner where I saw some longevity and buy in from them. 

When crunching the numbers, it seems to make more sense for our situation every time.

Note some of these are not the case in your situation: 1) The value added by the ADU addition is often significantly less than the cost of adding the ADU.

Hey Andrew👋🏽, it sounds like you're leaning into Option 3 - buy another house hack, and based on your situation, that seems to be the best option for you until you can build up enough equity to buy a deal cash - also consider that if a property is distressed, you can also do a hard money loan and they will give you the money to rehab the property, too.

Let me describe my personal financial situation for more context. 

Can someone advise how to deal with this situation?

Here's a bit more about my situation...

It's not always an option, but when it works out, it can make a big difference.I get that every situation has its quirkes, and sometimes the usual routes just don't cut it.

Honestly, the entire situation was a nightmare—except for one silver lining: meeting Melissa.