My goal is to understand the current demand and rental potential for ADUs in this part of the city, as well as the costs involved in building.

In the cities the government got involved in housing and low income housing was built for poor people.

Investing in real estate and 1031 exchange replacement properties may not be suitable for all investors and may involve significant risks.

However, their terms involve a 20-year amortization, a 5-year ARM, and a rate of prime + 0.5% thereafter.I’m exploring other options for financing and would appreciate any suggestions or advice.

There is work involved as you have well found out. 

Might be a little bit confused here, but from what it sounds like you were involved in purchasing the property, renovating it and then selling it?

Alternatives to ConsiderIf you want to involve an entity for liability protection or other reasons, here are some potential approaches:Assume in Personal Name and Transfer to Entity:Assume the loan in your personal name and later transfer the property title to an entity.Important: Transferring title may violate the loan’s due-on-sale clause unless explicitly allowed by the lender.

This usually involves putting down 20% down payment on 150K-170K houses.

There is a lot of risk involved with that and it could turn out to be a problem with the wrong people in place. 

Even someone like Brandon Turner is less and less involved in his syndications, so there's an increased risk that his syndications will not be run with his original values in place.