I’ll likely be working the entrance door. 

Adding a covered back porch and new windows to the building, as well as adding a half bath and a bit of square footage by adjusting the front door entrance.

Prefer individual exterior entrance/exits. 

It's perfect for building an ADU but because the property is an attached single family and its backyard is surrounded by other properties' backyards, it almost seems impossible to create an independent entrance for the ADU.

We ended up getting a SFH that is a 3/1.75 upstairs and 2/1 downstairs that has space to add a kitchen area downstairs and are currently going through the remodel planning so we can rent and stabilize.If you’re going to go that route make sure you are looking at properties that have plumbing, electrical and drainage all close to where you need to add your extra sink/stove and obviously check the ADU or AADU laws in your city and find properties that can match that.Here’s some helpful terms for searches that we used to find properties with potential properties on MLS:MIL, mother-in-law, in-law, suite, 2nd kitchen, 2 kitchens, separate entrance, separate living, multi-generational, multi generational

I’m wondering because it seems like I could just do section 8 on a single family home (3-4 bedroom) or duplex and it would be an easier entrance to passive income, with less tenants.

Put a barn door on entrance to laundry room from kitchen.

If you get a house with a separate basement entrance I don’t see you having a problem.

And the only way to access the mother in law suite is through the house or the through the backyard which has no entrance other than through the house (it's a town house so I can't walk around the house to the entrance since all the houses are connected).From what I can see, the house has good bones and foundation so it has a lot of potential.

Similar to Steve, I also like the west side of Denver since you have those supply restrictions and good price points for house hacks in Lakewood and west Denver neighborhoods (Barnum, Village Park, Valverte,Westwood, Athmar Park, etc) near 6th avenue, and you find more properties that already are split up with mother-in-law basements, additions, separate entrances, etc that make great candidates for house hacks.