So how do I socialize the benefit of doing something like taking a 200k ADU construction loan to add $X in top line and $Y after servicing the new note, but with an increased property value etc etc? 

I’ve actually had a number of people exercise their option and get a loan and buy the house.

I would also recommend doing your due diligence on the new lender, and make sure they are not just a salesy loan officer trying to win you over with term sheets that don't exist... 

Purchase price: $219,000 Cash invested: $63,275 Buy and hold single family residence using a 203K loan What made you interested in investing in this type of deal?

They can be sold to owner occupants that get a conventional, fha or Va loan.

HELOANThis takes second position and is a closed end loan, meaning it's given as a lump sum similarly to a "regular" mortgage.

As others mentioned, you're going to have a very hard time getting a loan when you're currently in default on any kind of mortgage, HML or otherwise.

Consider FHA loans for lower down payments and reserve for repairs or upgrades.

There are not issues with giving funds, but you have to define how they are given - are they a gift, a loan etc...

I agree with everything @Michael Baum said.Many people, including myself, have used a 10% down second home loan to buy a property used for a STR.