I am about done rehabbing a house I bought a while back.  The market here is pretty hot right now.I started looking at doing another flip after I sell this one, and there are no lots for sale or many fixers either,so ...

Hello, New state rules allow  California homeowners  an easier time building small second dwellings, (granny flats, accessory dwelling unit) on their properties.  

I've heard recently that the State of California passed a "ADU" law (Additional Dwelling Unit) which allows for a conversion of a garage to another livable structure.

I will not develop property unless it cash flows in year 1.(.58 acres with 3,000sqft min per dwelling so 8.42 dwellings or 8)Land Cost: $25,000 ($3,125 per unit) - Hoping this land cost is what gives me an advantageConstruction Costs: $706,270 ($85 psf construction costs) - This isn't a hard quote yet and will be updated once I get it officially quoted.

She helped me cancel my original homeowners insurance and set me up with a different company for Dwelling and Fire insurance (landlord insurance?)

Then a dwelling fire policy is written (with out liability) for the rented building. 

How much will it cost to obtain a  permit for this 2 unit dwelling's modifications?

You are not going to be able to buy a QUAD priced at $160K if they only lend you $100K.If you go to larger multi-family unit dwelling you would be a passive investor as you are a beginner you don't bring much value to the table apart from a keen sense to learn REI.

Rent control does not apply to SFRs, but it might apply if that SFR has a guest house and considered an additional dwelling unit.

From what I can read in the tax code it seems possible with the homestead exemption here:This annual exemption is available for “residential property that is occupied by its owner or owners as his or their principal dwelling place, or that is a leasehold interest on which a single family residence is situated, which is occupied as a residence by a person who has an ownership interest therein, legal or equitable or as a lessee, and on which the person is liable for the payment of property taxes