The primary form of diligence we see on the forums is "what do you think of XYZ sponsor and deal" whereas the common form of diligence in the space by institutional investors, large investment groups, family offices, and sophisticated investors involves following the sponsor for years, underwriting the deals, validating rent comps, background checks on the general partners, and a host of other diligence that materially de-risks the investments.  

My goal is to understand the current demand and rental potential for ADUs in this part of the city, as well as the costs involved in building.

Here are a couple of methods of pipe replacement that I am aware of you might be interested in looking at.https://www.youtube.com/watch?

In the cities the government got involved in housing and low income housing was built for poor people.

Investing in real estate and 1031 exchange replacement properties may not be suitable for all investors and may involve significant risks.

You should always look for Tax-Deferred and Tax-free methods to Invest.

However, their terms involve a 20-year amortization, a 5-year ARM, and a rate of prime + 0.5% thereafter.I’m exploring other options for financing and would appreciate any suggestions or advice.

Might be a little bit confused here, but from what it sounds like you were involved in purchasing the property, renovating it and then selling it?

If I did the BRRRR method would this work out perfect?

You can also use the Enemy Method to check the rates of your competitors.