Hi All,I'm new to this forum so here's a bit of background on myself: I'm a young, new real estate investor that currently owns 1 residential investment property (it has 1 main house and 2 accessory dwelling units in the back, so 3 units total.

Hi Cassandra, have you considered adding and Accessory Dwelling Unit to your home?

@Alek LupaWhile there are always folks who will live in a basement, this type of accessory apartment is generally less desirable than an above ground unit.In addition, digging down a crawlspace and underpinning the foundation is an expensive undertaking (provided it is possible, sometimes houses have crawlspaces, rather than a basement for reasons other than economics).  

Account Closed I would read into the local rules on Accessory Dwelling Units it may not be exactly your goal but a lot of cities with housing shortages allow ADUs aka In-law units to help alleviate housing shortages.  

Looks like ADUs might be worth considering.  Interesting article;http://www.buildinganadu.com/what-is-an-adu

What you can do in a single family zone is to add a companion unit /granny flat or ADU, and the State has now made it a lot easier to build an Accessory Dwelling Unit.

Once in a while I see a SFH with an accessory basement apartment, but I understand that I'm not supposed to rent both units if I'm no longer an occupant.

We do plan to live in the upper area and wondering if we were to upgrade and legalize the downstairs if we could turn this into a duplex.I understand we could turn the downstairs into an ADU (accessory dwelling unit) but not sure if that means it could then be sold off as its own property in the future.If anyone has an RE lawyer suggestion for this particular issue, would love a recommendation!

That will help narrow down what type of accessorial charges you can have. 

We used the proceeds to  add an accessory dwelling unit.