I work with a handful of investor friendly lenders that don't require W2s or tax returns (lending is based on the property not the borrower) but am always exploring new avenues.

I have the template from the BP "Book On Rental Property Management" and will use it as a starting point but need some additional language. 

For example the last rental property we purchased we owe on it about $86K and if paid off would cashflow an additional $600 per month.Because of our household income I am worried that paying off properties would bring us into tax brackets. 

@Steve Hungerford, the additional basis from the capital improvements is not lost. 

My question is can I legally modify the lease to add the 2 additional adults and increase rent by $600/mo? 

Considering your equity and cash reserves, exploring alternative financing options like traditional mortgages or partnerships might provide a more balanced approach to acquiring your investment property while mitigating risk.

Recently, I have made the decision to wholeheartedly commit myself to this journey.My current plan is to invest in a multifamily home for house hacking in my local area or perhaps a single-family property with an unattached garage or basement that I can convert into an Additional Dwelling Unit .

I should probably provide some additional insight:1.

The mover can often do the set up for an additional fee. 

There are also additional costs of operating and maintaining an LLC, like separate bank accounts, annual report filings, tax filings, etc.2.