Greetings, I am a Real Estate Broker based in Washington State, with extensive experience in residential real estate and recent involvement in commercial properties.

@Miranda LeMaster If your agent can not offer you a good commercial option, then you are working with a personal lines agent and you may want to think about making a change sooner than later.Ideally you want to have 2 separate insurance programs.  1 for your personal and 1 for you business/commercial exposures.  

Renting to a group home or adult care facility can be a viable option, but it comes with specific considerations.

The couple lenders I've spoken to thus far told me they're completely underwritten based on my personal debt, assets, income etc. and not on the properties debt service.

What are my options as far as securing that second mortgage and what would you recommend, Conventional, FHA, Hard Money?

Depending on the facts and circumstances of the agreement, it could either be treated either1) the sale occurs as of the original agreement date, and then your taxable gain is generally spread out over the life of the principal payments as an installment sale (although I should mention any depreciation you've taken on your property could affect this), or2) the sale does not occur until the lease option is exercised, and gain reported at that time.

I am currently overwhelmed by the options out there in real estate investing.

Facebook and all these online or social media based groups can only get you so far.

Have you explored alternative financing options, like hard money loans?

Leadzolo is a good option too, leads are $179 per lead and round robin so they don't sell the same lead to mutiple investors