Here is how I'd slice this bread. 

This was a fantastic appeal and call to duty for anyone who had a dream, and anyone who looked past the 9 to 5 way of living and yearned for their own slice of a better tomorrow.

You have to hit the "secondary" market man.  Go

Be in control.If $500k is a small slice of your world, go ahead and throw it in a pile with a pool of others' funds and hope for the best.

Have a handy man go through the unit and inspect it to see what needs to be repaired. 

The bill slices the ADU application approval time in half from a horrendous 120 days to a more reasonable 60 days.

Fly to close to the sun & you'll eventually get burned man. Going

It needs a ton of work, but the bank has it advertised for a rediculouly cheap price, so much so that it might be worth it,,....but,........one big issue,....The propery line for the lot that House A is on goes through a 2 foot slice of House A. 

"With the area appreciating around 5-8% per year".......still rationalising, you really did not come on here for advice you were seeking confirmation.Go all in man, go all in.

I see where you could get some diversification by having a smaller slice of many more pies than 1/2 of one pie.