I am in California.Cash for keys is always an option.

The best asset protection is hiding your assets; second best is hiding your ownership identity behind numerous entities3.

What are my options now?

Definitely look into HELOC/cash out options, but if those don't work in terms of rates or availability I'd suggest using the existing cashflow from your multi to offset a primary mortgage, and then find a primary with an ADU.

Once you get a flavor for lending options you should run a proforma and determine how much return the project will be able to generate on its's own and how much return will be left for LP investors if you go the syndication route.

They are nice and guests like them, but obviously there are much cheaper options on Amazon. 

Or renting out by room can be an option for better CF. 

Hey Alvin,Yes investment HELOCs are an option depending on the details. 

I know as the Lender, I always have the option to modify things but the NoD helps set the stage if the borrower doesn't act or respond in a way I feel is beneficial to getting the project across the finish line and me my capital back.     

Financing options include cross-collateralization, cash-out refinance, and DSCR loans.Good luck!