Since some demo has begun on the cottage, would I need to get it back into a liveable condition first, or could it be included in the valuation in an as-is condition?

For example, I was at the building department this week and while talking to the licensing secretary she informed me that she has access to the demo list that code enforcement has access to as well.

Usually, the property is beyond repairable at that point and I believe it is used as a way for a city to take control of the property and demo it.

@Wei Jie Yang, where are you looking to rehab and what type of property, deal size, etc.? 

I would do the demo and landscaping.

Demo all the drywall out, remediate mold, complete reshingle of roof, replace all windows, replace all outside soffit/fascia/dormers, replace all siding, repipe whole house, rewire whole house, redo all mechanicals such as hvac, redo all interior and exterior doors, paint interior and exterior, replace any framing or insulation damaged by mold/water leaks, replace all gutters, minor landscaping, minor outside repair of concrete wall, install all new cabinets, install all new countertops, replace everything in 6 kitchens, replace everything in 6 bathrooms, install handrails,  install significant flooring and minor subfloor repairs, and install all trim in house.Project will cost around 150,000$.What would be fair for this?

I wonder if it would make more sense to demo it and build a duplex not the Adu.

Demo, 2 dumpster rentals etc was about $1-2k.

I know that in Indiana, buying cheap houses, demoing them, and building fresh is a solid strategy for flipping but having seen the list of permits required up there vs down here, I would advise to make sure that you have all your t's crossed and i's dotted. 

Get demos, attend webinars, etc.