But if you took a HELOC, which tends to have relatively high interest rates, your blended rate (the average of what you're paying on your mortgage plus the rate on the HELOC) would likely be in the same range as today's mortgage rate.You'd also only be renting out one unit, but by selling it might allow you to get more than one additional unit and still grow your portfolio. 

I'm still unclear what potential issues can happen if they did get a roomate and didn't tell me.

As for a W-9, that is required if you're reporting to the IRS that company/person's earnings and technically is required for anything paid over $600 (I believe) to a single person/entity in a given year so you can issue a 1099.

Option 1:Pros:Simplicity: You avoid the potential complications of alerting the lender.Maintains Low-Interest Rate: Since your loan is at 3%, you continue benefiting from this favorable rate.Avoids Immediate Full Payment: You won’t be forced to come up with $45k immediately.Cons:Risk of Detection: If the lender identifies the payments coming from an LLC, they might call the loan due.Potential Consequences: If the lender enforces the due on sale clause, you might be forced to pay the remaining loan balance quickly.Option 2:Pros:Transparency: Being upfront might build trust with the lender.Possible Flexibility: Given your solid payment history, the lender might agree to the arrangement.Legal Compliance: You avoid any potential issues with violating the terms of your mortgage agreement.Cons:Risk of Loan Acceleration: The lender could still decide to call the loan due, forcing you to pay the remaining balance.Potential for Higher Payments: If forced to refinance, you might end up with a higher interest rate.Given the pros and cons of each option, but a cautious approach might be best:Consult a Real Estate Attorney: This can give you a clear understanding of your legal standing and potential risks.Evaluate the Importance of the 3% Rate: Weigh the benefits of keeping your low-interest rate against the risks of potentially having to pay off the loan early.Consider a Gradual Transition: This method allows you to continue benefiting from the low-interest rate while reducing the risk of triggering the due on sale clause.

But generally I think areas that are relatively inexpensive with low(er) crime, decent schools, a diversified job market and steady population growth are the best places to aim for.

Using 5% annual at 5 years $250k for $500k equity: 155% return500k at 80% LTV: 138%Using 5% annual for 10 years$250k for $500k equity: 225%$500k at 80% LTV: 314%The numbers show the issue.

I'd like to be your contact for anything REIT related in Memphis, TN.

I'd love to be your contact for anything REI related. 

All good - no issues there. 

Your first question is the debate between Repair vs improvementRepairs can be immediately expensedImprovements need to be capitalized and depreciated over their useful life.The other issue is if the property was purchased in unlivable condition and you rehab it to become livable, all repair / improvement costs need to be capitalized.