I'd put it into an index fund, reinvesting the profits, and in 5 years, start living off the profits, retired early, letting my traditional retirement funds grow until eligible age and add those disbursements to my income. 

Instead of working with larger more traditional lenders, I thought building a longterm partnership with a smaller local bank would help build my empire faster and more efficiently.

I'm just pointing out that you're making an observation on traditional multiplexes whereas the original poster is talking about simply adding an ADU to the house. 

Do you think it is smart to take the hard money lender route until a traditional bank could pick up the remainder of my loan? 

@Darren LookerOne of the easiest ways to slash your tax bill is to pump money into a traditional IRA or 401(k).

Furthermore these skills cannot be proven in a traditional interview process.

Maximum age for traditional IRA contributions is repealed.

Is the loan to asset ratio 160k/100k enough to go through semi traditional means on financing the deal?

Big win for the buyer, and win for you since the affordability on your home for buyers is a lot better than one that would be sold with only traditional lending.  

I currently own one and sadly the cost of homes has gone up so much that doing it the traditional way no longer cash flows.