I want to make sure we're abiding by the rules and legalities in regards to the VA loan.Also, as an exit strategy, when we have to move after three years, my thought is that we should just rent out the home and the second dwelling so that we're getting more money than just breaking even.

**Disclaimer to point #1: If you are unable to find an Insurance Company who will cover your dwelling with a Pit Bull animal on-site, or if you are required to pay a substantially higher premium as a result of the Pit Bull animal - I think a very strong case could be made on your behalf that this is an un-reasonable accommodation that you would be required to make to rent to this tenant.

Turns out the homeowners had paid off their 1st mortgage and the heloc was in 1st, instantly worth 15k-ish.

3. after completing steps 1 & 2 above, inform the listing agent that you wish for all your offers and counter offers be instantly forwarded to seller by email within 2 hours of submission Just like in their pictures where they're always giving the Thumbs Up, all realtors have their smart phones surgically attached to the side of their heads, on their person or within reach 24/7, so they can do as requested above.   

If the accessory dwelling unit (ADU) was constructed in a workmanlike manner you should get the necessary permits. 

If you are remodeling it first they will probably have to insure it in stages (Builders Risk & Liability policy, Vacant building, Homeowners/Dwelling Fire) . 

I have had clients INSTANTLY give me a PFS some worth close to 100 million in net worth that are individuals.It's how I choose to run my business.

The minimum openable area to the outdoors shall be 4 percent of the floor area being ventilated.Heat Source- RequirementsR303.9 Required heating.When the winter design temperature in Table R301.2(1) is below 60°F (16°C), every dwelling unit shall be provided with heating facilities capable of maintaining a minimum room temperature of 68°F (20°C) at a point 3 feet (914 mm) above the floor and 2 feet (610 mm) from exterior walls in all habitable rooms at the design temperature.

When we initially agreed to a purchase price, we thought our price was good & we had instant value.

If you decide to sell the home look for an apartment deal that instantly provides positive cash flow.