That guideline is lender specific, so I would suggest shopping it around. 

While these contractors are certainly out there, in my experience they also tend to be the ones that work with home owners directly and charge "retail" prices, not "investor" prices.I would shop around with lenders to understand how they work with their loans.  

What I'm thinking about is to combine bedrooms 1 and 2 into a large primary and add a full path adjacent to the current full path. 

After some networking with other local investors I've come up with a few smaller shops that should have good insight into the best avenues, so will pursue that as well.

here is the situation. i left a really good paying job to take care of my 81 year old parents because my dad is chronically ill and my mom is almost there. i wont go into too much detail, but my sis doesnt help them. ill leave it at that. we have a person who comes twice a week to help with cleaning and other household tasks. i carry the bulk of the weight cooking their meals, running errands, grocery shopping, picking up meds, and taking them to dr appointments. its a full time job. i get a small salary of $1000 a month from a care giver sub contractor for the VA. ive been paying my bills with what savings ive had, but only have a few months of funds left. i own a duplex. i have over 200k in equity. i live in texas and texas has weird laws about refi and heloc/heloans when the property is 4 units or less and owner occupied. i would rather not sell, but if thats my only option i will have to at some point.does anyone have any advice or possibly be able to point me to lenders who might be able to work with my situation?

As mentioned above your new rate should actually be 6-7 range not 8s so shop around.

That will set the price points you can shop at.

I just recently listened to you BP episode.I have also actively been looking in the Flagstaff area with the Short Term Shop agent over there after talking to Avery, @Luke Carl.

I am always up for sitting down at a local coffee shop and just talking about real estate. 

College students may appreciate a quiet study area or a place to visit with guests while their roommate studies in the apartment.Maybe there's a need for a coffee shop or other small business that needs very little room but also provides a service your tenants would be interested in?