Since Joe is not a registered lender, Joe is not held to the same standards as a lender and the sale could be a wreckless and poor activity by the bank putting Bob in that situation.

If you're looking for appraisal value an ADU may not be the best bet, but if you intend to sell, my anecdotal evidence suggests in dense highly desirable neighborhoods, ADU square footage will gross the same as the main house.

Some even bet against the market and made a fortune.

ThanksI bet that's a good short term rental market!

The fact its in a landbank tells me that it was taken back for some reason, which tells me its likely not a high commercial demand for development, but I could be wrong.If it is "on the main drag" in this town then I'd think doing a new build home to do a targeted and intentional air bnb would be the best bet. 

One key tip as you begin is to connect with local investors who are active in the markets you're considering.

Focus on connecting with investors, flippers, and landlords who are actively buying.

Talk to your tax advisor about how to release your passive activity losses based on your situation.This post does not create a CPA-Client relationship.

Active?

I would do this first before engaging an agent unless you are extremely active.