I will qualify for a higher loan because of the dwelling unit income.

The property is two units/easily converted back to Single Family Dwelling.

My question is, what type of limits should I have on these dwelling policies for Coverage A (Condo Unit) and Coverage C (Personal Property)? 

These homes are called auxillary dwelling units (ADU).

I'm mostly interested in the BRRRR strategy, thinking of small multifamily owner-occupied dwellings.

Sean,For my first home what do you suggest single family or multi unit dwelling? 

Furthermore, from your comments I assume you are depreciating the entire dwelling structure (including the roof) as a single asset. 

They will only lend on one unit dwellings so if you have a 2 to 4 unit property you'll have to use a portfolio, commercial or private lender.I hope this helps and have a good one.https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B4-Underwriting-Property/Chapter-B4-1-Appraisal-Requirements/Section-B4-1-3-Appraisal-Report-Assessment/1736875861/B4-1-3-05-Improvements-Section-of-the-Appraisal-Report-10-24-2016.htm

I am currently waiting on sellers short sale approval to start on a Flip and have just wrote an offer on a ADU ( Accessory Dwelling Unit) property here that I will BRRR.

I know that people are doing really well with short term rentals in our area and given the changes to the additional dwelling units in CA that may open up some additional possibilities.