They view each loan individually and have been lending to me even though I only work my W-2 on a limited part time basis.

The answer will form around what work you are doing that requires permits.  

Your ability to qualify depends on income, credit, and lender requirements, but leveraging your equity makes your request more feasible.

The Sonyma FHA loan, if you refi the loan, move from before the 10 year requirement, etc.

Flat out, I realize we're friends/family, but I need this lease in place to comply with laws that require things in writing and for my protection should there ever be issues.

If you can qualify for conventional cash out refinancing, most lenders do not have a minimum loan amount requirement.

If cash flow is your priority, out-of-state investing in more affordable markets like the Midwest or Southeast might make sense, though managing from a distance requires a solid local team.If you stay local, networking will be key since the best deals in expensive markets rarely come from the MLS.

You could also use a Fannie May Home style renovation loan which a conventional loan and require 5% down vs.

This of course can be scaled up as well for better profits, if you have a 1 acre lot, you can probably fit 2 buildings with 4 units each (depending on zoning requirements), or 4 buildings on 2 acres and so on.

Maintenance and potential repairs will also require a long-term financial plan and setting aside a contingency fund for such expenses.The steady cash flow, appreciation over time, and tax benefits can make a meaningful difference to your wealth in the long term, especially with the principal paydown on the mortgage.However, if managing the property from a distance feels too burdensome, or if you’d prefer the certainty and flexibility that comes with having less debt (especially given the high mortgage rates), selling and using the $100,000 in equity to reduce your loan for your next home may be the smarter move.