Option 1:Pros:Simplicity: You avoid the potential complications of alerting the lender.Maintains Low-Interest Rate: Since your loan is at 3%, you continue benefiting from this favorable rate.Avoids Immediate Full Payment: You won’t be forced to come up with $45k immediately.Cons:Risk of Detection: If the lender identifies the payments coming from an LLC, they might call the loan due.Potential Consequences: If the lender enforces the due on sale clause, you might be forced to pay the remaining loan balance quickly.Option 2:Pros:Transparency: Being upfront might build trust with the lender.Possible Flexibility: Given your solid payment history, the lender might agree to the arrangement.Legal Compliance: You avoid any potential issues with violating the terms of your mortgage agreement.Cons:Risk of Loan Acceleration: The lender could still decide to call the loan due, forcing you to pay the remaining balance.Potential for Higher Payments: If forced to refinance, you might end up with a higher interest rate.Given the pros and cons of each option, but a cautious approach might be best:Consult a Real Estate Attorney: This can give you a clear understanding of your legal standing and potential risks.Evaluate the Importance of the 3% Rate: Weigh the benefits of keeping your low-interest rate against the risks of potentially having to pay off the loan early.Consider a Gradual Transition: This method allows you to continue benefiting from the low-interest rate while reducing the risk of triggering the due on sale clause.

However, here are some considerations:Permitting: Unpermitted structures are often a red flag for lenders because they may not meet local building codes or safety standards.

I was fortunate to buy it when prices were much much lower and got a great deal on it so we don’t have a mortgage on this building but if we did the cash flow would help with that as opposed to taking a distribution at the end of the year.

It's none of their business what is going on with the other tenants in the building.

The first buyer is going to build a house.

Adjustable-Rate: If you plan to refinance, we can discuss fixed-rate and adjustable-rate mortgage options that suit your long-term goals.Cash-Out Refinance: Once the property appreciates, a cash-out refinance can provide funds for further investments or renovations.Living in the property initially helps you build equity faster.Your townhouse investment is a promising venture.

The goal is to buy a fixer / upper and try to update and sell before building from scratch.

Since it is in an A class neighborhood, would you consider living there or house hacking it with a roomate?

I have been working with investors over the last 3 years helping them find good deals on land in desirable locations and then building a new house on it to resell.

To be clear my market is very heavily tilted towards appreciation only FYI https://www.amazon.com/Building-Wealth-One-House-Time/dp/007...