Get a property that suits your goals, live in rehab it, and force appreciation.

Between what the contractors say, what you see around the neighborhood and research I am sure you can find a cost effective method to replace the stairs. 

with no master en suite.

Once that is approved, that voucher program and rent would come into effect.

Effectively, it's like making extra payments on a mortgage, except you can then pull the money back out when, say, a credit card comes due.

As @Scott Runyan mentioned, the size of this deal seems better suited for a JV or partnership than a traditional syndication. 

Back House is a in-law suit fenced off from main house 450 sq ft unit.

There's really more to it than that, but it would take 10-15 minutes worth of talking to fully explain, which is a little too much for a forum post.The sale or exchange of the dwelling unit requirement that you're reading in both the majority and the dissent of Gates is in effect an anti-abuse rule to prevent someone from engaging in behavior such as: buying land, putting a mobile home on it, then moving the mobile home to a new lot and selling the old lot every couple of years while utilizing the Sec 121 exclusion on each lot sold. 

Hello,I have recently rented my townhome, which i was living in and had home owners insurance, for obvious reasons i would like to get Landlords insurance but was wondering how the mortgage company would take it, i ha...

Not doing that has the same effect as not having one.