Our initial idea was to build-to-rent two 1,300 sqft homes on the additional tracts of land, but after speaking with lenders, the current interest rates made this unfeasible.

You suggested it heheBut does it go against your core value is the question?

I opted to  provide my renters with a yoga mat, hand weights and the house pool is great addition to get some exercise! 

Hey Anne, I'd suggest you do some research on the MTR rental rates and vacancy rates in your target area and understand the costs involved in renovations, financing and property management.

I had a hard time finding a lender that would lend on this due to the two dwellings for one loan, but the realtor suggested Southwest Funding.

Buyer's agent suggested "Cash to move out" but I'm not exactly sure how that matters if the tenant is HUD and needs a new HUD apt. 

Additionally in the event of a default or bankruptcy, how comfortable are you hiring an attorney to represent you and the other stockholders in the bankruptcy process that can take years?

It seems eviction would be inevitable.3. would you suggest hard money lending?

I actually like the suggestion you gave for the second home, I just don't know how I would swing it since we're targeting it as an add the the investment holding company as opposed to a solo purchase for myself. 

Not sufficient to add any additional bedrooms to.