HelloI’m currently in the process of selling a home and am under contract to purchase another home using 1031 exchange.The home I’m selling is under mine and my wife’s name personally.

So much so, that according to AirDNA data there are 4000+ properties on airbnb / vrbo in this destination, though the property that I am evaluating has been used as a primary residence and has no rental history.

Best to start the process to sell.If you decide to keep it, you should talk with the contractors - you don't need to do high-end renovations for a rental.

Many investors do this and don’t see issues, but it’s best to proceed carefully and know there’s some risk.You don’t necessarily have to inform the lender, but it's wise to consult a real estate attorney or CPA to guide the process and minimize risk.

-repeat the process every year by acquiring one house every year with the appropriate income qualification

In Metro Detroit area, police will not remove these types of occupants (they are afraid of scamming landlord having police remove legal tenants), calling them a "civil matter" forcing landlord to start court eviction process.

The appraised value seems low and I am trying to understand the best strategy to challenge this value and the cost / benefit of going through the condemnation process. 

Your informative account has helped fill-in a few progress blocks in my own process. 

Below is the factual data.Rental Inventory & Median Rental Prices (The data is for Ft Myers and Cape Coral)As stated in previous updates throughout the year, we were expecting an increase in inventory and a decrease in rental pricing.

Due to item 1, adding an ADU can require years to start achieving any return (once the accumulated cash flow recovers the initial negative position).4) Adding an ADU is a slow process.