Alternatively, we could just rent 2 separate units in the SFR. 

With that said, have you thought about cheaper alternatives such as laminate countertops?

Techniques are reasonably well established, and they're not exactly flashy.

I would like to work out an alternative option that works for both the tenant and myself but I am not sure of the best course of action to take. 

If you have the time and willingness to put in the extra work managing it yourself is always the better alternative.  

Your alternatives are:1) seller financing2) house-hacking3) portfolio lender4) pulling equity from another property to invest in the next one5) private lenders6) partners or investors

any free alternatives?

And the alternative is?

The truth of the matter is there’s a ton of uncompensated work that goes in to a syndication and you should be paid.Think about the following:-The amount of time and energy it took to analyze enough deals to finally find a true opportunity -You are qualifying for the loan, providing the risk capital, Liquidity, and a track record-You’ve built essential relationships with Comercial Brokers and property management companies -You’ve negotiated the opportunity at a price that works -You’ve performed the paper and physical due diligence-You’ve built relationships that took time to establish in regards to their other equity partners-The General partners are going to create value and increase the NOI and ultimately the value of the property-You provide a phenomenal alternative investment that has a very unique tax benefits&-You carry all the weight and fiduciary responsibilities I hope this helps you make a strong case and your limited partners walk away with a sense of appreciation verses turned off.Dino

An alternative could be that you intern for a small development company, with the express purpose of gaining development experience, or at least that's how you should communicate it to them.