.: Quote from @Mark Cruse: Not sure why suggesting a person utilize an off-market strategy is bad.

Now for my out-of-pocket expenses:Down payment: $7500 (Hard money loan 90% purchase price 100% rehab)Closing costs: $6500Inspection: $400Agent's commission: $5200 (didn't raise purchase price of house with seller concessions, so that money didn't apply to the commission sadly. won't make this mistake again)Holding costs: $1300 (one interest-only payment of $770, roughly $200 in utilities and $360 in insurance)Total: roughly 21 grand. 

More specific: He stole months of rent and utility payments from a tenant (and threatened to evict her!)

From time to time I will hear of people who utilize it well and gain business from it. 

Remain responsible for rent, utilities, and other terms until a replacement tenant takes over.#2 can be a bad option in the middle of winter when renters are harder to find.

Rent out part of the space at least to help pay for mortgage and utilities.  

A realtor who used to have a PM company called "JBS Realty" until this month.He used to manage 8 of my properties and is currently refusing to pay out multiple 5-figures worth of rents/property reserves/security deposits/unpaid utility bills owed. 

This step would include understanding City zoning & platting, locating utilities, researching City codes for development requirements (big ones include detention), etc. 

My question is - what is the best strategy for utilizing my home equity and buying my first rental?

Especially if you get a long term resident in the ADU and then you might can utilize them to help on your turns of the MTR.