@Adam Walker what are your options if they default?

Sounds like you're essentially renting to a roommate with a few more bells and whistles than room-shares typically receive. 

Specifically, we're exploring whether constructing a duplex and triplex or two duplexes would be the most profitable option.

We have several different "types" of properties to include traditional single family rentals, one multifamily rental, lease to buy options with tenants who hope to buy from us, two short term rentals, and some agricultural farm land that is cash rent. 

That conversation might guide how you approach the township about permits, but I would agree with Nathan that you'll likely pay some fines in addition to the typically paperwork. 

And correctly..you cannot co sign as a primary if it's occupied..2+ units can sometimes require larger down payment (as you've found) another option could be to access equity against another property..check in with @Joseph Chiofalo for potential lower down payment options..might be able to get to 15% down..Good luck! 

This is a great option for investment properties. 

@Rick AlbertClearly, Spain isn't the best country for your typical LTR but it's a great place for STRs.

For cash-outs on investment properties - you can typically pull up to 80% of the value out, and it will take 25-30 days. 

I don't typically recommend a cost segregation study on a short-term hold since you don't get to see as many of the benefits, but if you 1031 exchange the property, it allows you to continue to defer the tax.