I'll be working for Security Bank, an under $1B bank focused mostly on CRE, IRE and commercial lending.

The proverb of old says "Whoever walks in integrity walks securely, but he who makes his ways crooked will be found out", it is as applicable today as it was thousands of years ago.I think Brian is correct, the reason many get in trouble because they read all of the misinformation on the web, there are some yea-sayers out-there (even here on BP, but most of the times they get corrected) who will tell you "yes, you can do this" and lead others into trouble.

If you want to do long term, then you need to ditch the rehab costs initially and plan on coming up with those through another financing methods or cash, once you own the property. 

The ADU is 25% of the property using the sq ft method.

Should I sell for the gain and go into another renovation or is there another method that would help build cash more efficiently?

Id want to see their lease, I know it's not as tough as mine, an accounting of their security deposit and rent history.

What are some suggest processes\methods to remove all bills paid and implement RUBS? 

Make sure it's clear you have no intention to buy the property but you are selling contracts as a business and doing this without a real estate license, you're now selling securities without a securities license too.

A senior secured loan gives a lender a structural advantage over “mezzanine” or subordinated debt because senior debt is the first to be paid; it has top place in the event of liquidation.

We found a property management company but before signing the contract, noticed that they put "owner to pay $395 to secure lease renewal of current tenant""owner to pay 8% per month but subject to $100 a month minimum payment" of gross revenues DUE (not paid) prior to monthly disbursements""if premises are vacant at any time during this agreement, then owner shall pay manager $100 per month for management of premises including supervision of maintenance"It doesn't seem like these terms fit for managing our simple duplex rental.