Additionally, his credit is not the best, and he has limited funds for a down payment.Any potential options or solutions that may be available?

In addition, due to them being eligible for conventional non-commercial financing they typically have lower cap rate than 5 units and more.  

Principal balance currently at 314kProperty Details: It's essentially a "2-in-1" property, with the main unit rented out for $1,900/month and an attached ADU bringing in an additional $1,200/month.

The unobstructed water views for both front STR units can be challenging to determine additional value compared to other 3-unit properties without views.

Just be sure to clarify that she isn’t a leaseholder but is authorized to reside in the unit.If you’re concerned about liability or want more peace of mind, you could ask the primary applicant for additional security, such as a higher deposit, depending on what’s allowed under Colorado law. 

Electric: is the easiest to split, but may require holes cut in walls to separate the units.Gas: gas lines aren't as flexible as wires, but it can usually be done affordably.Water: most cities will NOT install additional water meters on a property.

This doesn't replace the need for a MSA that will capture additional clauses needed on a Contractor-SubContractor relationship, this is just a project specific form you would use in addition to the MSA (prepared by your Attorney):This template is for informational purposes only and does not constitute legal advice.

Additionally, we are approved with the Better Business Bureau (BBB).

Not sure the cost of this for you but I feel with hot tub and fireplace you already have a lot of warming options and not get much additional revenue.

If the water bill is $100 a month, increase the price by 20% (or whatever you decide is fair) to compensate you for the time required to split and bill and to cover additional use when tenants squander the utility.