Note: I understand that all debts have to be disclosed. 

To be clear, you never want to say anything is a "loan" or underwriters will treat it as debt and it opens a can of worms.

You now have less likelihood of a tenant trying to sue you for your personal assets, bookkeeping is cleaner at tax time, and you have a business foundation that you can build over time including credit for the business, additional accounts for CapEx/Vacancies, etc.TLDR: Use a business to do business. 

The project is seller financed; they have a promisory note from the Managing partner to pay them debt servicing every month.

Paying off the debt is a good idea, but it also depends on what type of debt it is (interest rates) and how long that will take.  

I like to look at cash flow, if I have debt on the property and my rent can cover my mortgage, taxes and insurance for the near future I am very happy! 

Most additions of that size never get built.

The payment will be about $1500 and I can also put it on Airbnb to offset some of that liability ( can average about $2000/month with 40% occupancy).PRO - i have a nice house right away, I can enjoy it, I don't have to worry about damages in the near future.CON - i add more debt to my portfolio, in the end i pay over 300k principle and interest included.CONTEXTI am investing out of CA where I live.

I’m thinking maybe this can keep her record free of any additional debt or could take another mortgage loan out in her name later down the line ? 

I’m looking for a San Diego based mortgage broker who has experience with programs for adding additional units to single family home lots, specifically the Fannie HomeStyle Reno and Freddie ChoiceReno programs, along with FHA 203k.