I’ve seen this issue in San Diego, where a friend of mine worked with a city planner to rezone a lot for duplexes and triplexes.

Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is expected to be higher, you may consider an umbrella insurance policy.

The major pieces of information you are missing include NOI which includes deducting all of your operating expenses from your gross rents sans debt service, market dynamics (what are vacancy rates and asking rents like in the market the building is located in?)

•Dallas & San Antonio, TX – High job growth and landlord-friendly laws.📌 Key factors to research before relocating:•Regulations – Some cities have strict STR laws, so check local policies.

I've found some construction companies that specialize in ADU (Additional Dwelling Units) conversions/construction in SanFrancisco and San Diego but not as many in LA. 

I grew up near San Francisco and moved to Reno, NV to live and house hack. 

I'm down in San Diego.

@Chris Ke With $200K for a down payment and the ability to invest full-time, consider starting with a 4-plex or multiple single-family homes (SFHs) within a 5-hour drive of Los Angeles in areas like San Bernardino or Riverside.

Building an ADU in San Jose of CA.

I’ve noticed that in places like San Antonio or even Omaha, from what I read in Forbes, the best projects come from really tapping into that local network.What you did..approaching the owner, closing fast, scraping the old structure..shows guts and a willingness to get your hands dirty.