You would have to probably have the proper zoning and or be able to obtain a special permit or variance.

In any event, here in Ohio when a tenant is on a M2M lease, you can non-renew the tenant's lease and give no reason at all-- and this is what you should do if the daughter makes you feel unsafe assuming that non-renewal without any reason is also permitted under the law in your state.

@Jason MeadowsThey’re legally called ADU Accessory Dwelling Units, and while it seems easy you can buy or build a tiny house and drop it there and rent it, you’ll need to go through the ADU permitting process (setbacks will be the issue), and the biggest expense of construction is getting water, sewer and power out to it.

@Danielle Witte I use Avalara MyLodgeTax to get all my necessary permits and file my taxes correctly and promptly.  

NOTE:To be “bonded” means the Contractor must purchase a Surety Bond, which serves as a form of Insurance to protect the Contractor’s Customers if he or she fails to complete the job properly or fails to pay for permits, subcontractors, or other financial obligations. 7.

sure thing, based on a max ltv of normally 75% (credit/assets/income permitting)

I really love 4-plex due to the ability to use at Short Term Rental (COVID has killed that a bit right now) but there are some loopholes in the city permitting process that make 4-plex a great option and a great way to diversify with STR (Short Term Rental), long term rental, and your own unit as well.

I am afraid that if I try to obtain permit to build something very small (lot is very narrow with set back requirements), the county will advise that septic needs to be re-done (installed 1979).

As your first property, I would actually suggest that you do (if your schedule and lifestyle permits) because the experience you gain while doing so will help you tremendously moving forward in your investment career.  

The engineer should be able to take care of the permitting/applications for this work.Good luck