After repair value is $100k-$170k (based on comps in the neighborhood, the range is large since the layout is a bit weird where the primary bathroom is in a bedroom). 

Im basically looking for advice on how i can save as much on taxes as possible.Part of the property is your primary residence, which does not qualify for 1031 Exchange treatment.

Again I am not advocating for this company and each person needs to do their own DD, all I am saying is I appreciated someone seeing something, calling me on it and having a conversation about it. if @Cheryl Abram  lost 100% of her investment then these must not be first position loans.. as even if a rehab fix and flip fails you still have SOME value in the assset its not nothing.

I won't be able to make the cottage legal rental without living in the primary home myself.

Is there some reason that you or the company simply don't discuss what happened and use this as an opportunity to turn a negative post into a positive one for the company?  

And using the process buy a new property or properties that you also intend to hold for investment use.The issue for you might be that you purchased this property with the primary intent of selling. 

Even in HCOL areas, adding an ADU typically does not make sense because developing a single small unit is the most expensive residential development that exists.Adding an ADU is a lot of work (probably more than a brrrr but with worse return), has poor financing options, typically adds less value than the cost of the addition, and detracts something from the primary structure even if it is just yard and privacy.Good luck 

Moreover, for someone in your position just starting, it's best advised to partner with an experienced individual to mitigate risk and adequately learn the process.

Here’s the winning formula successful local house buyers and wholesalers use to connect with sellers, close deals, and create win-win solutions:Be Relentless: Show up every day with positivity and persistence.

This is an investment property of the seller, not their primary residence.