The rent is less but compared to the expenditure it’s a much better option in my situation.

If you want to discuss the options you're considering in more details, please feel free to message me!

I would weigh those two options out and see what costs less overall between an entire new loan and or the blended rate of the two.

I was going to pivot this conversation at some point on how to continue investing in Huntsville with a low risk, yet still cash flowing option.

I emailed the main address and asked about a license number and they responded this, "Unlike other individual HML we're not limited to an NMLS because we offer a nationwide lending option."

DSCR is a good option here.

For better or worse, 1031 seriously constrains their investing options, even for real estate. 

If not, is getting am umbrella insurance policy on the DADU my only liability protection option and is it a good protection strategy? 

It's wise to consult with a real estate CPA who specializes in taxes.They can advise on capital gains taxes, potential exclusions under Section 121 if occupancy requirements are met, and the option of a Section 1031 exchange to defer capital gains by reinvesting in another property.

That being said, we are currently exploring financing options for funding our first investment property purchase which have brough up a couple questions we cannot seem to get a straight forward answer on: 1.