The tenants were out for 24 hours and came back found it and the water had already flooded out to the floor and the ceiling of 1st floor.

Opening your business to a larger pool of renters is a better business move, as long as they make the necessary salary and have stable employment.

In addition to the high cost of building, the low appraisal reflects there are many more owner occupied purchasers than investor purchasers so adding the ADU likely reduces the buyer pool. 

The Oregon Coast is ground zero for regions of the country that will in many ways become more inhabitable as temps rise, water dries and abundance of resources is more critical.

Our highest bidder, a downtown-based construction GC business, could not tell us what grade of lumber was quoted, would not share what brand of garage doors they used ("local vendors"), would not identify their steel beam and column supplier or water service vendor.

It’s a 3/2 pool home that’s not on the beach but close enough to be desirable (10min), but is only zoned for midterm rentals.

In other words, it's the jerk who doesn't give 24-hour notice to enter the apartment and who is renting out a dump with a broken hot water heater to a tenant with no background check that will have the most problems.Since you're local, you learn how to work with local tenants, property managers and contractors.

For example, an experienced plumber may suggest putting hammer arrestors on a plumbing system, to help alleviate potential water hammer problems (knocking noise) and prolong the life of components/fixtures/appliances, but the local building code may not require them.It would also depend on what you are doing the work for and how the deal #'s pencil out.

My client is concerned if he goes to sell years down the line he will face an issue where the new buyer would not be able to obtain a loan on a property with a CLTA policy and his buyer pool will shrink to cash buyers only which could delay the sale. 

In terms of new construction, a couple things to be aware of in San Luis Obispo County are water shortage issues and development fees/taxes which can significantly increase the building costs.SLO city and the neighboring cities are particularly diligent on their water usage, as most of the county's water supply comes from three surface water reservoirs and a groundwater basin.