Otherwise, I recommend option two, using a personal loan.

If they do need financing, then speak with your lender about their new build financing options. 

Example: you can option to have a fireplace with two windows on either side.

What other options would be good?  

I reviewed about a dozen options.

The previous owner actually offered it to the tenant, which in turn, they reached out to me.

We actually have a project wrapping up in mid city right now.  

I have used him for over 5 yrs and was actually recommended by a nearby HOA President. 

You likely only made a down payment of 3-20% ....but you still get to write it off on the full value across 27.5 years.So 400k/27.5 = 14,000 ish a year of a write off where during the year you didn't need to incur an actual expense, no cash outflow. 

Cleveland is another solid option.