I just point this out for others.. no one can make guarantees that you will not lose money when in fact the collateral your buying is already damaged and is junior position..

The lease is now unsecured debt… not a junior lien on the land.

I am considering adding a small studio (attached junior adu) of about 264 sq feet to my home in San Jose. 

Hard to imagine a junior tiny adu was given value in a sale- an appraiser might comp it to a she shed.

Has anyone had experience with a reverse mortgage short sale where there is an additional junior lien?

Junior ADUs don't have their own address, the owner must live somewhere on the property, and may be less expensive to convert. 

This is often referred to as a HUD partial claim.There may be differences here and there with respect to the MI issue but a junior lien is a junior lien and it gets extinguished in a foreclosure regardless of the players involved.

The junior investor brought 30% and I ran the deal How did you add value to the deal?

We've been eyeballing a place to put our junior in college but we don't have the income and down payment to buy a 2nd home outright or the 20% to do it as commercial. 

I have found time is better spent building tools to quickly analyze & procure new deals, rather than hyper-analyzing the metrics of one deal, ultimately making initial review faster & more reliable (spend time on the things that make sense, quickly remove things that don't, even junior-level staff can identify good opportunities with the tools, etc).For example, if I'm modeling a SFR to 3-4 unit scheme, I can quickly check the $/sf/mo for each of my proposed units and get a good idea of the GOI without having to manually dig through &  find rent comps in that City/Zip:- So instantly I know in Woodland Hills that a Studio is close to $5/sf/mo on avg, 1 Bedroom closer to $4/sf/mo, with the 2 & 3 Bedrooms closer to $3/sf/mo.