Welcome! You’re actually already house hacking, so you’re starting from a great place. Three renters helping cover the mortgage while allowing you to spend more time with your daughter is exactly the kind of flexibility house hacking can create. Before getting too deep into financing, I’d first figure out which expansion option is actually feasible and what each one will cost. For the tiny home/ADU, Colorado has become much more ADU-friendly, but I would still start with your specific city/county zoning department. Being “near Denver” can mean several different jurisdictions. Confirm that an ADU is allowed on your specific lot, what type is allowed, size/setback requirements, utility requirements, permits, and whether what you’re calling a tiny home would actually qualify as a legal dwelling unit. Some areas only allow you to rent the main house or ADU not both. I wouldn’t spend money on plans until you know exactly what the jurisdiction will approve. The basement may end up being the easier project. If the space already exists, framing, electrical and water supply can often be fairly straightforward. One of the first things I’d investigate is the sewer. If you’re adding a bathroom and there isn’t already a drain where you need it, cutting concrete and tying into the existing sewer can add quite a bit to the project. I’d also confirm ceiling height, egress, fire separation, HVAC and permitting requirements. Once you know something like “the basement will cost $40k and should rent for $1,400/month,” THEN I think it makes sense to figure out the best financing for that specific project. With your current DTI and unsecured business debt, I’d be careful about piling on expensive personal or business debt just because someone is willing to lend it. 0% business funding can sound great, but you really need to understand the promotional period, fees, payments and what happens if the project runs long. If you want, post roughly where you're located (city/county), your basement setup, estimated project costs and what you think each new unit could rent for. We can start breaking down the two options and see which one makes the most sense.

Thanks for sharing the numbers, that helps a lot! I agree the tiny home makes more sense to do first. One heads-up on private money: most private and hard money lenders charge around 10% and want to be paid back in 6 to 12 months. They expect you to sell or refinance to pay them off. Without equity, and with a high debt-to-income ratio, a refinance probably isn't available yet, so that could put you in a tough spot. Business loans are also hard to use on your primary residence. Here's what I'd look into instead: 1. Ask tiny home builders what financing they offer or which lenders they work with. Some tiny homes can be financed like an RV, with longer terms. 2. Look at used tiny homes to bring that $70k down. At $1,500 a month in rent, a $70k tiny home pays for itself in about 4 years before expenses. That's solid. For the basement, I'd save up and do it once the tiny home is cash flowing. Are you looking at a tiny home on wheels or on a foundation? If wheels are allowed I bet you can find one cheaper then $70K used. Check facebook marketplace within 100 miles. Keep us posted!