Yes, the cheese is moving, however we get MORE than we pay for with CL.

I'm sure I'm not the first one to try this, but I haven't come across many others doing it.Back in January I bought a house and cottage for $32,000.

On the property there is a main house with 2/1 and there is a cottage in the back which is 1/1. 

Find some ancient cottages and start mail-blasting the owners.

That being said, I believe most of the time that conventional loans cover 1-4 family dwellings which has historically included those with mother-in-law cottages (kind of like what you are describing).The big thing to keep in mind is that lending rules are constantly in flux.  

They are out-of-state owners and what to sell their cottage.

., speaking of deals in Oakland, I purchased a duplex + cottage with an FHA loan which will meet the 1% rule whenever I move out of the unit I occupy.

Sometimes we have to forget the cheese and just get out of the trap!  

This cottage industry (pun intended) is fast becoming a major growth industry and is spreading like a wind fanned fire.

Cabbagetown has mostly small shotgun mill cottages, that were initially built for the workers and are around 1000sqf.