As a private money broker, I strongly advise real estate investors to be cautious and avoid any lender that requests upfront cash payments.

Mostly people with minimal RE experience are adding a single ADU and they often make that choice based on cash flow without taking into account the negative equity position.  

Hawaiian real estate law differs from other western states significantly, mostly due to its monarchal heritage and the Bishop Trust influence.The basics are the same as would be in California; determine the condition of title ownership (individual(s), estate (including conservatorship, if appropriate) OR fiduciary acting for trust.Use a qualified private money equity lender to make a loan sufficient to buy out the cash-only beneficiaryThe legal community in HI and Big Island in particular is small.

Each one offers its own set of opportunities for appreciation and cash flow.

Even if it does, there's closing costs to consider.As I said, I have no cash myself, so I'm asking how I can deal with generating cash for closing costs (and a down payment) if it comes to it.The house costs $139000.

I'm getting $300 cash-flow per unit after everything, but I'm more in it for the long-term appreciation.

Purchase price: $560,000 Cash invested: $140,000 STR investment What made you interested in investing in this type of deal?

At a minimum I'd suggest $100,000 cash.

If the property is not cash flowing and is due to your mortgage carry, it will most likely require a cash buyer to work (or close to it). 

But weigh the costs of insurance and taxes against the cash flow and make your decision accordingly.