Plumbers can separate lines, but trenching and additional work can drive costs into the $5,000 –$10,000 range.

In addition to that, the septic tank is undersized for the size of the home.

After that's under control, focus on increasing income through additional work at your current job, taking on a side hustle, or finding ways to increase income on your existing rental.At the same time, educate yourself.

Here's some input to help guide the decision between selling or renting the property, considering the specifics of the property and the potential additions like the ADU (Accessory Dwelling Unit):1.

Do not be afraid to Collateralize yourself with additional deposits to fill a vacancy. 

In addition to the different tracks @Chris Seveney descrubed, there is also good information on creative financing and seller financing (including what to avoid).

In addition I heard that is better having one LLC for each property and one for management only.

@Edgar Duarte Selling now under the primary residence exclusion avoids capital gains taxes, allowing you to reinvest the $500K equity in diversified assets like index funds or additional rental properties.

In southern CA, even garage conversion ADU additions are typically costing more than the value added.  

Also there is an additional tax on the returns due to the financing.