If you have a longer lease, you'll be committed to dealing with that situation unless you can get them to agree to move out sooner.In our leases for the extra room(s) in the house, we made sure to spell out everything such as what was common space and what wasn't.

Instead, put as much towards your next property purchase and don't look to maximize expenses on existing properties. 

But also agreeing with @Wayne Brooks this sounds like a wrap around deal otherwise the existing lender could exercise the due on sale clause, another thing to look into. that's my .02

Before I commit to a contract I am exploring both options of a conventional refi loan on an existing property i own out right since I have good credit and work a full time job OR...going hard money refi on it.Reason why I'm having a hard time deciding is due to timing. 

@Andrew Mercer its highly unlikely that you will be able to add another unit so before you start anything research with the local code enforcement office to check if there are occupancy permits for the existing 3 units and if a fourth can be added.

Do not hold the unit for anybody...... if they want it that bad they are going to have to sign the lease, pay the deposit, first month rent etc etc etc, and just have to suck it up having 2 places rented at the same timeOnly other option, is a non-refundable deposit of one months rent.... so when they bail at the last minute, you aren't out that months rent.....Otherwise....no way...... why would you want to lose $$ to hold it for someone that has zero commitment to actually following up on their end of the deal?

But rarely)  This tells me all I need to know - that I was under the wrong impression about what the lender would require regarding using the existing rents to off set the debt.

You definitely took a good first step by finding BP and committing to learning. 

I always suggest to people to set up MLS / Redfin alerts on all the properties in their area and commit 20-30 minutes a day to going through them. 

The interest you save is great and the mortgage balance will accelerate downward faster.So now when that is arranged and recorded - there are a number of things you can do next - refinance - put the seller first in second place - you get cash -- when you are ready to sell you can take some cash, do a wrap on your interest free mortgage and your existing mortgage and charge interest on the money you owe (it don't get no better than that - the yield is off the chart).