Torrance currently has zoning code that covers accessory dwelling units (ADUs) that I would like to take advantage of to permit the rec room as a dwelling so that I can live in it and rent out the main house.

As some others have said paint the bathroom with a color that is going to provide some contrast (interest) and then add some accessories for pops of color, add shower curtain, etc.

Other options are rowhouses with accessory apartments in DC or single families with accessory apartments in Montgomery County.

And if possible also build an accessory apartment on our new home and rent that out.What say ye BP?

Much of the regulation applies to renting out individual rooms and/or short term rentals in an accessory dwelling unit(attached or detached ADU on the property. https://www.oregonlive.com/portland/index.ssf/2018/08/80_percent_of_portland_airbnb-.htmlAs a side note,  CM2 land on SE Belmont is a prime zoning for building plexes. 

Check to see what counts as an accessory dwelling in Brantford - this would be a triplex in all but name and might be easier permit wise.

The laws for renting out MIL’s or “accessory dwelling units” seem to vary drastically City to city.

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Checkout Southeastern salvage for flooring and other cool accessories, and sometimes cabinets.

Create your own by adding an accessory dwelling to a single-family house, as detailed in this BP thread from California:https://www.biggerpockets.com/forums/61/topics/732543-here-is-my-adu-variation-to-brrrr-its-called-bra2xrrDC, Arlington, and Montgomery County have all updated their zoning laws in recent years to broadly permit ADUs within or behind owner-occupied houses.