I am running some numbers on potentially cash-out refinancing a rental house.

Both of these classifications work great for potential creative financing deals.

We feel confident in our abilities to make it work, but looking for input about potential pitfalls, codes, etc. 

Start looking around at markets in your area and analyzing potential house hack deals to get familiar with the numbers.

That sounds like a solid plan but you would need to find a great deal with large value-add potential.

The single-family home would allow more comfort, while the multi-unit would allow more potential cash flow. 

Here is exactly what I am doing right nowI started with personal improvement books such as Atomic Habits, How to Win Friends and Influence People, Can't Hurt Me by Goggins, The Intelligent Investor,...I do believe it's important for me to set out a good mindset, good habits, and a good work ethic before doing anything.

Does the 10% pref with a 50/50 profit share seem equitable given the project's scope and profit potential? 

I should focus the proposal more on the potential interest opportunity vs the tax implications. 

I think you are probably priced right if it were summer, but may need to drop another $100 given the Chicago winter.Most important if you are confident in your price it is often just a timing thing...the right tenant will come, but I know it's tough when you only have a couple of doors...that lost rent hurts.