My first multi-family..can someone with more experience evaluate?

[Kevin Meyer]

Hello I am getting into real estate investing. I am looking to use my VA loan on a "duplex" in Hawthorne, CA (near Space-x). Asking $895k, and I planned on offering $850k. The "duplex" is 3 bed 2 bath, but the master bedrooms to both units are walled off creating two 2 bed 1 bath units and two 1 bed 1 bath units (no kitchen in these. essentially a hotel room). There is room in the backyard to add an 600sqft ADU (which I plan to do and get permitted by the city). As the property stands now, the 3 car garage was converted into an illegal 1 bed 1 bath ADU (not permitted by the city).

Using the VA loan would allow me to put no money down (no PMI and at an 850K purchase price at 2.75% interest rate). I estimate the mortgage to be around $4400-$4500. Currently, all the rent money would be enough to cover the mortgage, however not covering all the costs like water, gas etc. I have about $130k in a brokerage account that I can use towards building the permitted ADU in the back, but this would essentially drain all my cash reserves.

Tenants come in place. They pay on time and have been there for years despite being on month to month lease terms. Breakdown of their rent is as follows: 2b1b-$1350; 2b1b-$1275; 1b1b-$600; 1b1b-$500; 1b1b garage unit-$950. Total rent collected is $4675. Expenses are water-$150, Sewer-$300, Gas-$40, Trash-$92. Total expense is $582.

After adding the ADU and making it a legal triplex, I would eventually want to turn the garage back into a 3 car garage, so I don't get in trouble with the city. The triplex in the area are going for between $950k-$1.2M.

I'm looking for advice from a seasoned and experienced REI. Does this seem like a good value add deal and house hack? Or is there too much risk involved? Thanks in advance.