You will also have to be a general contractor of sorts, responding to maintenance calls, repair issues, state and local compliance, sourcing, screening and leasing tenants, evictions, court appearances, lawn care, snow removal.

Very difficult to enforce compliance with your wishes if the garage is shared.

The outcome is that many banks and brokers pulled out from many locations because of the cost of compliance.

I am not sure if they can come up with 10% down pay right a way especially they may need reserve money to install fire alarm equipment and fixture in the property for patients safety and code compliance instead.  

You would be applying for a secondary suite building permit..Code compliance, inspections etc. must be meet to be legal.If it is not a legally approved unit and you rent it out your insurance will be in default.

I am mainly focusing on fixing the compliance issues first and then to things that may affect my appraisal.

Purchase an AIRDNA report on Colo Spgs or 2.) check the airbnb calendars of similar renters in that area/reach out to people already renting.a word to the wise: Colo Spgs just changed their airbnb laws to limit who can do them, so just make sure you are in compliance before you buy.

If you build your house out of cinder blocks, it can be closer.If there is an official code compliance case on the property, you'll receive extra scrutiny both in the permitting process and the inspection process.   

Second, if it exist, and you have a local property maintenance code and inspections, you'll have to fix it in order to be in compliance with the code--if it isn't working, it will be considered in disrepair. 

But there's a whole heap of moving parts that have to be there for 1031 compliance as well as your protection