What I do see is that a strong screening process improves your chances of getting a responsible resident. 

@Nate Pucel The depreciation basis for a rental property includes the purchase price plus the cost of renovations and improvements that add value or extend the property's life.

For existing properties, you must make substantial improvements (equal to the property’s value, excluding land) within 30 months.Ensure the duplex qualifies as an OZ investment and complies with QOF rules.

However, after receiving the survey results, I discovered that the house is located less than 1 foot over the sublot line (see attached image).Here are the options I’m considering:Rent the current house for market value (~$1,500–1,600/month) and convert the detached garage into an ADU to rent for ~$1,000/month.Relocate the house to split the lot, then sell the newly created lot (~$100,000) while renting out the existing house.Relocate the house to split the lot and build a new home on the second lot.Demolish the current house and garage, split the lot, and build two new homes.At this time, I am uncertain about the cost of relocating the house.Questions for the community:Has anyone faced a similar situation?

I also found that being at "market" rents it takes longer to rent therefore missing out on a month or two of income negating the ROI on improvements.

The mobile home I would only want to keep for a few years to live in before building a new home. 

Utility improvements.

I also kept my first home and it is paid off now and worth approximately $150k, with current renters. 

Other risks, the contractor walking off the job, a storm hitting and delaying the project for weeks, someone breaking into the home and stealing stuff (which happened just the other day to a client of mine), a squatter, or drunk driver driving into the house (happened a lot at my old job as a firefighter lol).

It depends on where you want to live, income, personality, and other factors.You could buy a large home and rent out the individual rooms to cover expenses, but this comes with problems.