✓Second Home Requirements  must be occupied by the borrower for some portion of the year  is restricted to one-unit dwellings must be suitable for year-round occupancy the borrower must have exclusive control over the property  must not be rental property or a timeshare arrangement1 cannot be subject to any agreements that give a management firm control over the occupancy of the property

@Michael Pursell following up on @Charlie MacPherson good comment you also may want to pay attention to the exact wording of this stuff and how its individually interpreted by the various building departments: Accessory Dwelling Unit, In-Law and other terms may mean something slightly different town by town and be treated differently, likewise if you owner occupy or not. 

I am curious since the cottages sound like smaller dwellings.

One thing I will throw out is the new Accessory Dwelling Unit (ADU) Law that was passed in California, allowing you to rent out a 2nd unit even if its only zoned for 1 unit.

(can dwelling be stepped up to $2.9M, increasing depreciation expense to $105k per annum over 27.5 year asset life?)

Hey everyone,I contacted the city and asked about the zoning of the building and they told me that the property is zoned for GB (General Business) and would allow for a multi-family dwelling that would permit 4 or 5 units! 

Let’s say 50% of the dwelling burns down.

To connect our house to the apartment above our garage or "Additional Dwelling Unit (ADU) we had to have pipes excavated underground to ensure that the garage apartment could connect to sewer/water from our house.

The cost of the Condo Association coverage & the Two condo unit policies would probably total more than just a Dwelling Fire policy on a 2 family rental property. 

But all these buyers are readily jumping on these things...Feel free to disagree with me but after watching this frenzy over residential and commercial dwellings over the last 3 years, I've become quite polarized in my views.