When I asked them why they lowered it they stated cause they wanted to lower their exposure to the market.

I'd wait this one out until rates lower and you can refi and learn from it to buy better the next time around. 

@Jonathan Bombaci recommend using that amount as a bargaining chip for lower rates.80% of evictions are wash, rinse, repeat. 

I am doing my best to accommodate and fix the insulation as well as see if there are programs in place to lower the cost. however i want to be firm with tenant as they are not compliant with paying rent because of the cost of the utilities.

DSCR or Fannie/Freddie loans can go up to 75% on single family homes, multi family homes (2-4 unit) max at 70% if you stick with Fannie/Freddie.Other things to consider would be:Paying points for a lower rate vs higher rate with no pointsIf going DSCR - Prepayment penalty term (0-5 years)The lower the loan size ($200-250k and lower), you should consider paying up to 2 points and doing a 5 year prepayment penalty if going DSCR.

For further context, we are trying to have him be the name on the loan because he would be able to utilize his first time home buyer loan to take advantage of the lowered offered interest rate.

what really needs to be reviewed is why is it not going well and what is the plan - its very different plan when you cut distributions and do a capital call  to hold $4M to lower your debt obligation to allow for a refinnance compared to needing a capital call because you are only at 80% occupancy and anticpated 95%, rents are 50 cents a square foot less than you wanted and expenses are 25% higher....

You will have to pay higher personal income tax rate, versus waitingtill after one year for lower Capital gain tax rates.

Going direct saves you and the seller money, giving you a lower cost to entry which helps all your numbers, but you have to put in the extra work to find that deal.

This implies residential units can be built at lower costs and provide better return. 11) adding an ADU to SFH can make the SFH fall under rent control.good luck