That house was purchased for about $750k and is likely worth about $900k now that the ADU is up.

You will want to have properties under contract before bringing a contractor out to walk the place with you.If I were in your shoes I'd have a 30 minute call/zoom/coffee with a couple of local GC's now and come prepared to explain to them exactly what you are looking to do.For example when I first got started I was targeting single level, 3 bedroom, 2 bathroom, 1,800 square foot homes, with 2 car garages, that were sitting on 7,500 square foot lots, and that were built of block in the 1950s/1960s.

I have a 2.1% 20-year fixed on my primary residence so I would not consider a cash out refi. 

My renewal with Burns & Wilcox is now at $3270.

Value and rents should eventually increase to turn cashflow positive and build your wealth.You're next learning experience will be, now that you are out of day-to-day management, how will you be able to handle the inevitable expense challenges?

They’d rather just trade toys on the sly and call it a day.3.

Quote from @Brandon Morgan: hey guys I am new to real estate and I just got my first rental property this past year and have tenants and things are finally stable now.

That 4% cap rate on in place financials is a lie.  

Using quality yet affordable materials can transform a space without excessive costs.I could remember working on a property an investor purchased.

You can refinance into a FHA 203k or like @Jason Wray mentioned you could even use a Fannie May homestyle renovation loan as well!