Hey Bruce, I wanted to point out one other potential option that hasn't been voiced, it works in Denver for me but check the rules in Littleton specifically with your permit.

You should have $150k in mind though so you're prepared for worst case - and also to allow for soft costs (permit fees, etc.)$75-90k is typical for a garage conversion ADU in Sacramento.

How much cash have you already injected into the deal including soft costs like architectural fees, permitting, etc...that you can document.

I understand that you have to apply for state permits for septics, but wondering how many you can install/build on a single property. 

However, the previous landlord permitted them to take over an additional 3,000 square feet on the second floor, which is now filled with inventory and unusable for other purposes.While this tenant has been reliable and has a long-standing relationship with the property, their occupancy of this extra space is limiting our ability to maximize rental revenue.

We ran into a bunch of permitting issues from the previous owner so if I can give some advice look for properties that already have a clear CO from the city if you can find it.

not everyone's family situation or lifestyle permits, but if you can, you should.now - on to cash flow. 

Permitted & inspected & we were allowed to do all the work. 

The first step is definitely seeing if STR would be permitted with your local county permitting office.

Duplex have different zoning that may permit additional units.