@Jeff White already hit the nail on the head as far as your options, and I'll agree that split strategies is a great way to go, as you hedge your bets against any downsides.

What is the down side? 

Downsides would be you would lose STAR exemption (NY reduction in property taxes for primary residence) and the above mentioned exemption for financial aid.

It insulates from downside risk.  

Protect the down side is the best option when you are starting out.

You also have to be ok with the money to potentially be tied up for 10 years.I recently listened in on a QOZ presentation and here were the are upsides and downsides that I picked up.Upsides1.

The downside is with commercial you're not going to get a 30 year fixed loan in the 4%'s or options for 5% down. 

Using an LLC has several downsides that need to be considered. 

Now there is always a downside, small or large that's all relative.

These are the soft spots you want to avoid.In your situation the tenant has clearly done nothing wrong.So if you are comfortable with the construction and financial burden I see no down-side.