You have an old school owner/investor who over the years has taking a liking to his tenants and developed a soft spot for those individuals.

I know can do it but the time, effort, and soft costs just (unless it's a huge issue) don't make it worth the time.  

I know all to well that there are people out there that expect  that.

@Eli Altman,I don't know about the additional soft and hard cost of the build-so I'll let someone else answer that one.

But it would be for the "soft" reasons like I could visit "free" and so could family, we could invite friends, blah...blah...blah. 

Thank you, @Jonathan Towell.

You can deduct costs to well the property, commissions, title, concessions, etc and any costs related to improving the home for resale (possibly more like if you rehabbed it while you lived there).

So far you have told us:-It is impossible to sell-It is impossible to owner finance-It is impossible to lease-option-It is impossible to raise rents-It is impossible to do anything that would prevent you from defaultingYou are feeding us this scenario almost as though you want us to come to the same conclusion that you already have come to. Well

That does not include the cost of buying the land or any of the soft costs like engendering and architecture.

They do not understand that lenders do a soft pull right before closing to see if any new debt is shown that alters the loan approval.I don't do residential but I am helping my brother in law.