The advantage with the bank was minimal closing costs, a good interest rate, and a draw system so I could get funding as I completed each rental unit. 

You won’t get there doing rentals.  

He has no legal rights to the property or the deposit because it belongs to the legal occupants of the rental.

While I don’t plan on flipping the house, I intend to use the property for short-term rentals (STR), and based on my research, it seems like it will perform well either as an STR or a long-term rental (LTR).Any ideas on how I can source the financing or recommendations for better lenders would be greatly appreciated!

Find someone who manages long-term rentals in that area.

Here are some financing options to consider:HELOC or Cash-Out Refi on Another Property – If you or your mom have equity elsewhere, this could be a more flexible and lower-interest option.Business Line of Credit – Since the property is in an LLC, you might qualify for a business LOC, which could cover construction costs.Private Money Lender – If you’re okay with 12-15% rates, a private lender could fund this as a short-term loan, especially if the guesthouse will generate strong income.Construction Loan – Some lenders offer short-term construction financing, which converts to a longer-term mortgage once completed.Seller/Partner Financing – Bringing in an investor or structuring a joint venture with someone willing to fund the build in exchange for a share of the income.Credit Card Stacking or Unsecured Business Loans – Riskier but could work if you need to bridge a gap until the unit starts cash flowing.Would love to hear more details—especially your timeline and expected rental income.

As others have mentioned, DSCR loans are generally for turnkey rentals (although outdated rentals may still qualify depending on the level of deferred maintenance). 

I live in Austin, TX, and own few rental properties.

@Ivan CastanonCan’t find a rental property to cashflow?

I did market analysis to find the right rental rate.