The fees are for the architect and permits because apparently the house is not a legal two family it is setup to be one with two water meters but just not legal.

Best thing to do is discuss with a couple of local GC's and or Architect's that have done this type of work.

Hello fellow Clevelanders,I've just acquired a property on a West side  and looking for an architect to make an attic as a separate unit - space is tight and staircase will have to be moved for sure.

Hello,I'm relocating to Sioux Falls, SD for at least a couple of years and am looking to buy a fixer (I like to build in equity and my wife is an Architect and Project Manager) to be our primary residence, then rent it out if/when we move away.I'm an experienced real estate investor (buy + hold for rent) but don't have a team anywhere near South Dakota.Would appreciate referrals for:Real Estate Agent (ideally experienced in income properties but I've checked out the purchase and rental markets in Sioux Falls remotely and really just need someone for showings and the transaction)Inspector (someone extremely thorough - I need to know exactly what I'm getting into so I can plan and budget properly)Contractor (looking for licensed, bonded, experienced, inexpensive but reliable - I'm willing to pay more for durable and low-maintenance rehabs and renovations)Property Manager (I will no longer be living in the area when the property becomes a rental)Handyman (if I don't find a Property Manager I like, I'll manage remotely but will need someone who can respond to urgent and/or low $ maintenance issues - I'll remotely hire trades to deal with bigger issues.  

This education may include paying a contractor a couple hundred bucks to walk through a property with you, take notes and ask questions.If you expect us to be the architect, the designer, the inspector, and the contractor I think a small fee is pretty fair.Giving the right estimate has nothing to do with it, contractors have different overhead costs (more professional ones may have an office staff, professional office/warehouse, ect.), different labor costs, It really all comes down to you get what you pay for.  

I hired an architect to check things out and he pointed this out to me.

The key is finding the right General Contractor and Architect, who has executed this in the past.  

An architect (or draftsperson) will have to not only show the elevations and layout of the unit, but they will also have to submit a Title 24 (energy efficiency calculation) as well as the site plan for the entire property.

as an Architect, i recommend calling both a structural engineer (first) and a foundation repair contractor. 

And of course, you will need to verify before demo with a licensed architect or structural engineer.