Sometimes people have different perspectives and see opportunity to add value or make money on a deal.

I do appreciate your feedback though as it is always good to get someone else's perspective on things.

I finance these types of projects and from my perspective I do think this transaction is too small and the LTV is not strong enough for a non-recourse loan especially with a construction component.One of the strengths is that you will be occupying a majority of the space so the project will be considered owner-occupied.

It's not necessarily that others do not qualify, we have a lot of qualified perspective tenants, it's that we only have 1 property (1 house) to rent to them.

Obviously the duplex makes a lot of sense from an investment perspective, but it would probably not be as preferred as a SFH primary residence.

What are some of the pointers from a tax and expenses perspective to consider for a married couple that is going to buy a 2 family, with the intention to owner occupy one unit, and build a portfolio over time?

From a business perspective, just because they pay well now, and say they want to die in the property, doesn't make them good candidates. 

Even if adding your son was good idea from business perspective, banks look at the lower credit scores among all the partners in the deal when you do cash out refinances. 

@Kelly DeWinter You give an awesome perspective.

While I can't speak to the financial merits of the plan, it might be worth reaching out to owners of tiny homes who are renting them out on Airbnb to gain some strong and diverse perspectives.