The property’s location in Morganton, a growing market, and the opportunity to add an ADU made it an attractive investment.

Prices increased dramatically and sellers know it.

Avoid lenders that want to escrow your payments at closing, this increases your cash to close drastically and, in my opinion, is not the best structure even for new investors.

The quicker you and the Banker can help them close, renovate, refinance and repeat will help them build their REI portfolio, increase their overall wealth and keep buying more homes.  

I would need to increase their rent (be reasonable) to cover the new costs. 

RE is a get rich slow game and there are increasing number of people talking about how difficult it is to retire from your day job even with large numbers of rentals because cash flow is thin.On the one hand there is the Small But Mighty portfolio mentality which I believe is a book in the BP store by Chad Carson.

On the one hand, I can see it as a positive indicator, for example of market health and increasing suburbanization. 

So if someone tells you, it does not matter about liens behind you - it does.There’s one more ; the borrower has increased debt service and when it either turns negative or leaves nothing “in their pocket” they may lose interest in the property, decide to stop paying all mortgages, and put whatever income they can into their pocket until they lose the property to foreclosure or one of the lenders obtains a court order prohibiting such.   

This doesn’t necessarily increase the property’s value due to the home’s temporary status, but it does keep the $1,350 in rental income intact.Refinance, skip repairs on the manufactured home, and instead use the $30k-40k for other real estate purchases.

Talk to your insurance company - depending on your deductible and potential increase in future insurance you may or may not want to put in your own claim.I would also probably consider cutting my losses and getting rid of the tenant asap.