And keep in mind that the rate on the 2nd lien will likely be 10-12% so depending on the cash flow it might not actually yield that much cash to you at closingMore importantly, it's just more debt so ultimately it sounds like you need an income-producing event to actually improve your situation and avoid some of the consequences that you mentioned

What was the specific rate he was quoting you?  

They got fundamentally sound real estate, with matching debt (10+ yr fixed rate) and budgets with the intent to hold nearly forever. 

Most people make the mistake on putting to much moey down or use "All cash" and then need to pull it out later at a higher rate.

As for cash or not I think it depends on rates, your level of risk tolerance, and what the opportunity costs is for that money. 

780 or higher should get you the best rates/terms available, no difference than 820 score.

Rental Demand and Rates: What is the current rental demand for ADUs in this neighborhood?

Less than 48 hours for mouse droppings to dry.

However, for longer-term profitability, flexible loan terms often have a bigger impact, especially with interest rates or repayment structures that align with your goals.

All 4 are booked for thanksgiving but 3 of them booked late enough that they received the late booking rate.