I dont see how the risk would be reduced on second mortgage unless you are planning to hold the property in some type of llc.

Unless you find some more fees to reduce that to $370 you will be exposed to tax on the $10k difference so just a couple thousand there.The extra $30k of depreciation will get rationed out based on the purchase prices of your two properties.

It might be partially reduced via an S-corporation.

To keep these approvals valid, developments should secure public investment to support housing affordability and ensure that at least 50% of the units are affordable.

I can promise you that my first deal was TERRIBLE, but I lived at a reduced monthly cost to living than renting/buying a single family and that is what mattered. 

An LLC shields personal assets from business liabilities, while S-Corp taxation allows you to reduce self-employment taxes by taking a reasonable salary and distributing remaining profits as distributions, which aren’t subject to payroll taxes.

@Michael VelezHouse hacking is a great way to start investing, as it helps you reduce living expenses while building equity.

I've accepted that I will take a significant loss on this, and have already learned a ton from it, but I would like to reduce the total loss as much as possible.

I have a distressed condo I was going propose this idea to a Trust that owns the condo.  3) ** Interest only loan at a reduced rate - and create a vehicle for them to also benefit from the MTR model?

For example, if the lender uses an 80% LTV on the loan, but the DSCR is 1.10x (and their minimum is 1.20x), then they will reduce the loan amount until they get the DSCR to 1.20x.