This completely depends on what you are looking for.

The key is that in order to completely defer all tax you must purchase at least as much as your net sale. 

There are companies such as Cover that offers a full service ADU deliverable from design through construction completion.

And if you bought this property several years ago, then you probably already have a killer rate, so suggestions to refinance seem silly as you probably already have the lowest rate....especially if your refinance was completed as you were an owner occupant, and not categorized as an investor to a Lender.In terms of tax implications, again, it depends on what your ultimate goal is, but if you placed this into a trust, or even a beneficiary deed, it would pass through to a beneficiary who would not have to pay capital gains on it in order to sell it. 

Once you have completed the consolidation portion of your 1031 exchange you now own a more expensive (and probably really nice) property that it must be your intent to hold for investment use. 

I am very interested to see experienced host's perspective.That's a great point, and I completely agree—many amenities are more about enhancing the guest experience, which indirectly impacts ROI through better reviews and repeat bookings.

In general, assuming someone isn't a complete doof when they buy, I don't think leveraging is as risky as people tend to think it is.

It can take a year or more to complete an ADU.

@Nick AmYou're making conclusions and, much worse, business plans from very limited and, in your case, completely wrong understanding.Self-employment tax that you will pay on your property management income is not instead of ordinary income tax on rental income.

I started with two remodeling projects and have since completed three new construction projects.