I even look at residential properties with key words for potential conversions to multi but those are also hard to come by.

Instead, the income (or potential income) of the property would be used for qualification.

If you believe the new assessment is too high, you can file an appeal.

Builders do this a lot to add extra potential sleeping area without having more bedrooms than septic is rated for.I have seen people put beds in the loft after closing or even close in this area to make an unofficial bedroom.Just be clear in your pictures and description and you should be fine either way.

If you can not find coverage with the agencies you have contacted, PM me and I will let you know the companies that we use that might do it.Because of your making payments to the owners potentially, I would look into commercial crime coverage and cyber liability. 

Which cities and areas do you think have the greatest potential for appreciation?

A 1031 exchange could help you diversify into higher cash-flowing properties or a market with stronger appreciation potential.

@Catherine Javier If you find the property is more of a liability to you and ultimately decide to sell, the 1031 exchange would probably be the best way to take advantage of using the tax and find something with a greater growth potential.

Look for properties with low taxes, separate utilities, strong demand, and potential for rent increases.

you will need to look at the APN of the property and line it up with what you actaully bought. as mentioned the tax assessed value is not an indicator of value. the land could be a utility easement, used for stormwater management etc.