I'd argue that the returns from RE are generally lower than the stock market This is HIGHLY subjective and CAN BE very far from the truth

This is the time you get to cover your rear end to make sure you won’t get stuck for hundreds of thousands of dollars worth of work that you were not expecting.

So history will be a good guide, and history will tell you the long term returns on Bay Area RE are good.The principles of investing are still the same.

I offered the rear unrenovated unit to my tenant and he is going to buy it at the avg price per sqft for the area so that removes a few variables for me. 

Easement with hydroelectric plant on rear corner of property that may be reverting back to me.

The ADU will be positioned so that it will not encroach on the set back requirements of the pole lot at the rear of the property. 

You are spot on when it came to your philosophy on rearing the kids to allow them to pursue they interests and nudge the ones that may want to come back into REI later.

Are you doing the one that was on the market with the rear unit? 

If another driver accidentially rear-ended them and damaged their car, that driver would be responsible for the damage, right?

Again it isn't enforced necessarily, but if there are issues at the home that will be one of the codes at their disposal to shut the property down.That's literally what 3 different realtors told me but I still don't believe in luck and good human behavior and want to protect my rear with legality being on my side :)