I'm trying my best to prevent mold growth, so I asked tenants for their renters insurance, to which he said, "our renters was with geico and we just switched insurance providers this month and have not got a policy active yet." 

Now you have seismic resilient with fire preventative. 

Newer construction code requires better earthquake-proofing, but it's still aimed at preventing a building collapse rather than holding the value of the structure.About 15 years ago there was all the talk about "100 year homes" but I haven't seen much come of that.

To be transparent, there is not 100% full proof way of preventing fraud.

Looks like the fed has chosen inflation instead of more rate hikes for time being so should prevent that from becoming a reality. 

I don't think we will be able to afford a 1.5M+ mortgage without a huge down payment (sale of our house).I feel this would be going backwards as we would focus on one property preventing us to do other things.

And this low demand could be a couple of factors, either a rural location with low population density or the area incomes are not high enough in order to prevent a rent burdened scenario. 

Moving forward blindly on that deal would have put our investors money at risk, which isn't an option, so WE took a $60k haircut to prevent that.

@Pat Aboukhaled I would ULS (unit lot segment) the primary house and include a clause in the call option that would prevent them acquiring the DADU.

Meet other investors in your area and stay in touch with them; you can ask them questions that might prevent problems.Best to you!