Is this typical to have 1 year leases and be treated more like a residential rental? 

The purchase was $375,000 and the rest was used for renovations.My cost bases in the building will be around $740,000.I refinanced the building with a $900,000 loan.I have an offer on the building of $1,400,000Total capital gains would be about $660,000So, my question is after selling the property (for easy math) lets say I walk away with $500,000 after paying off the bank loan.

For example, if a 1,600 sq ft main house is appraised at $100 sq/ft, what could I expect a 600 sq ft ADU of similar build quality to be appraised for?  

Although loan amounts this small are going to be very limited to hard money lenders.

Sounds like you as well as them are in a tough spot.

Any advise would be appreciated.

After much back and forth with our attorney and their regulators, etc they decided series LLC’s should be a part of their customer base and have rewritten their policies to accept them (and us).

Recently, my tenants have expressed concerns of people hanging out in the front of their units, creating some uneasiness - to the point where they want to exit their lease for safety reasons.

While he didn't say that it would be expressly forbidden, he did have concerns about its legality in Texas.

The other option could be doing a fix and flip loan, if they have reserve money and then refinance into a DSCR loan, they could be into it for less money than a conventional investment loan or DSCR from the begining.