The only options that seem available to us are add the parents to our application, remove either parents or wife from the duplex, or in the future put the rents all in my wife's name which might negatively affect my in-laws.You guys are my Hail Mary, hoping you can spot a solution I'm missing!

From stainless steel to white, and even soapstone, there’s tons of options to choose from.

Typically, an exit strategy would be considering selling a property down the road.

Check to see if there are any purchase + rehab options. 

If possible, I would suggest looking into negotiating a cash for keys option. 

Howe much term is left on it, do they have any renewal options? 

I've drawn the new build for an owner-occupant to have a single family home but with the option of having a "tenant"/roommate or family member (perhaps in-laws, or elderly parent/grandparent, or a brother/sister, who wants private, separate living space, etc.) living in their own space with their own separate utilities.

Reserved the land but then now knowing what to do, gave away the option on 1st

I typically rent my properties below market to avoid vacancy and I run my numbers as such.  

I hosted attorney panels in local REI clubs, and there never was any consensus.In our great state of Texas, your best option could be a Series LLC: one LLC that has individual compartments for each property.