To me the cost of purchasing cash flow is too high, better off being cash negative 2) alternate rent models: mtr, str, rent by room.  

However, there are lenders who offer more flexible terms or even no prepayment penalties, depending on the deal structure and your investment strategy.To find such lenders, here are some options to consider:No Prepayment Penalty Loans: Some lenders, often private or portfolio-based, offer DSCR loans without prepayment penalties, though the trade-off might be a slightly higher interest rate or fees.Yield Maintenance or Defeasance Alternatives: Ask about other prepayment structures like yield maintenance, which can sometimes be less restrictive depending on market conditions.Custom Terms: There are lenders (like us at Phoenix Funded) who can structure loans tailored to your needs.

Alternatively you can do the LOC (line of credit) on it so you can retain the home but are definitely subject to today's current rate environment.

Sellers should also be open to alternative negotiations and market timing to maximize property value in shifting market conditions.Buyer Strategies: Buyers should explore off-market properties, distressed assets, and opportunities in gentrifying areas.

Alternatively, can you use either unit as an STR to increase cash flow even further?

Not when there are so many alternative methods of engagement towards resolve of which past clients have appreciated.

There are alternatives note investors have and thats new origination's where of course you will have some bummers but your not starting out with a defaulted borrower at the get go.

This would help us benchmark and explore simpler alternatives while understanding how complex the structure mentioned above truly is.I assume they are not actively managing their business?

The alternative is I pay cap gains taxes and dump the capital into my rebuild project on my primary which would allow me to rebuild without any financing at all. 

I'm generally a proponent for alternative lenders if they can provide better leverage or if they are needed due to time constraints.