You could even go further and setup multiple MLO on multiple SFH, then refi using a portfolio loan using a NOI evaluation, thus shifting the value away from the building and over to the portfolio performance.

We are not expecting any shifts.

Maybe a little more risk than I’m willing to accept with his current situation, so I’m shifting to a private note and leveraging him as a private investor.

The most minor of market shifts, property condition shift, can shift such deep DEEP into the red and if you don't have significant capital reserves to lean back on, or sizable holdings to average out against, it's like tieing on a hangman's rope. 

I just recently did a VA streamline on both the property im living in now and my rental property.

A lot of my clients are shifting their dollars to short-term rentals, land for construction, and 5+ multifamily.

Things shifted a lot, giving people the ability to move around the globe working remote, wanting nicer homes, supply vs demand going crazy ever since, however - it’s no secret real estate tax laws have favored the wealthy since the beginning of time.

I'm just glad it's shifted from an income based qualification to an asset qualification.

And there is a potential in transactions like this for the IRS to perceive you to be shifting basis to benefit one party or the other. 

Look at the shift in the market, improvements made, value added and if the value proposition is favorable, negotiate a transaction.