Long term, option 2 produces significantly more wealth over time.

If we can get 3.3% and 23 year terms on a commercial loan.  

One side is rented long term while I live in the other.

I would also like to have your opinion in terms of structure.

It is actually currently a rental property (purchased in 2017), I am planning to move into it for 2 years as our primary residence, make some improvements and then convert it into a short term rental. 

If below 1.5, will likely to keep renting out with main house and ADU separately, around 7 k/mo.If I sell it, will likely just pay the long term capital gain tax.Quote from @Wilson Lau: Competition is definitely high on the buy side, and I see more and more buyers coming in as we approach the summer season.

My thought is to approach her by saying that my original plan was to purchase the property and convert her unit into Section 8 so that I could get the $3,200/month rent -- but since she's a long term tenant, I would be willing to forego that plan and tell her she can pay $3k/month to stay.What are your thoughts?

One of the most important things I consider when selling a property besides price and terms is who is the buyers agent.

There you can get the best financing terms, and work on a timeline that is more forgiving.Happy to provide more insight!

  ( I don't want to just make my money on the land-- I can do that myself by selling it) What joint venture terms/structures would work for something like this?