If it costs $100,000 to install an ADU and it rents for $1,000 a month, then it may be worth it.

With an LLC, you may be able to deduct business expenses more effectively and avoid double taxation.

It will likely be cheaper than the cost of financing.

I'm looking for super low cost, or preferably free.

That's your cost. 

Simply put, we start off with the As Repaired/Completed Value (ARV), then subtract from that number a reasonable profit, the rehab cost (scope of work), which we've gotten good at, a contingency reserve for any "unexpecteds", our cost of capital/carrying costs (interest and costs of the leverage used), and our costs/fees on the buy and sell sides of a flip.

Selling the PropertyIf your parents decide to sell, they could: Sell As-Is: At a current appraisal of $350k, they could walk away with a sizable profit (after transaction costs like realtor fees, taxes, etc.).

You can create a formula for splitting that cost among the tenants.

I agree with John, we are seeing renovation costs of $150k- $200k for a basement unit and $250k + for a coach house. 

We agreed, and then they informed us after the fact that the cost end up being $2,000.00 because it was "so dirty."