In San Diego at the current rates for a purchase loan (which has better rates than an ADU additions) at high LTV, I show 1% does not cash flow on a sustained basis.  

If you are going to be an owner-occupant, want a low down payment, and are planning to do a renovation, the FHA 203k and Fannie May Homestyle loans are your best optionsHow do you know the property is currently upside down on the mortgage? 

If you need more to do the rehab, perhaps instead of partnering, you could get your former boss to do a personal loan. 

And you'll have a solid W-2 income to help you qualify for loans. 

Quote from @Jarrod Ochsenbein: I purchased an existing Padsplit with a DSCR loan. 

Hey Makani, you should check out DSCR loans, which are primarily for investment properties and focus on the property’s income potential rather than your personal income.

The bank set me in at 7.1% interest (construction loan short term) This will be a side hustle for me.

This is really a lot of information packed into a densely worded post.Yes, you can use loan proceeds to buy out another member, but it doesn't seem like you'll have enough to buy out and develop.

@Jordyn Ohs pay off/down your Heloc aggressively and/or look into DSCR loans for future acquisitions.

I'm learning more about loans and such as I used the VA.