Do you really want to bring prospective buyers into a messy home?

And the garage feels oversized, so I'm thinking about the possibility of converting it into a 2-car garage and adding ~300sqft of living space as another bedroom and hallway that still connects the house to the garage, so that the new layout will be 2500sqft, 3 bedroom, 3 bathroom with a 600sqft 2-car garage.

Feel free to reach out and we can discuss. 

Instead, a lender will want to see that the property currently brings in (or has the potential to based on market rents) enough to cover the monthly principal, interest, taxes, insurance and HOA (if applicable).

And considering that the asset will most likely appreciate in value, you might feel you could have got more returns.

I never thought of doing this with business credit, but I feel like this can be a cool way to approach the BRRRR method with business cards offering 0% introductory APRs for up to two years without affecting your ability to refinance due to the utilization not affecting your personal credit. 

Once you add up the lost rents, damages, and increased liabilities this tenant brings you're better off starting proceedings now.Another option?

@Cody MillerHave you considered renting out a room to help pay down the mortgage and bring in extra income?

Make sure you leave that new LLC as a disregarded entity, or if you bring investors on with you, make sure it’s taxed as a partnership (subject to Subchapter K).The only way to mitigate cap gains would be if the property appraised very close to its net tax basis.The other strategy at your disposal is to dissolve the S-Corp in the same year (though you really need to be in-line with your CPA on this one)… you should have more tax basis post- deemed sale, and that basis would help you achieve a capital loss on dissolution of your corporation.Talk to your CPA my friend!!

If you need some recommendations, feel free to reach out.