The government has tried it with section 8 and rent control in some cities , we all know the end result .You would be better off starting a jobs program teaching the trades , educating them on finances and work ethic and then rebuilding abandoned properties for them to buy 

I have heard on various news channels that the powers-that-be in California are going to push for much higher density when they rebuild LA after the fires.

Going from a $232K purchase to a $575K sale is no small feat, especially with a full excavation of the foundation and reframing involved.I’ve got a buddy who tried something similar outside San Diego last year.. he had to reinforce the entire property with a new slab and rebuild the interior layout from scratch.. definitely not for the faint of heart, but his final sale price turned heads in that local market.

Usually, tenants are receptive to the idea but I also wonder if tenants with a higher credit score care less about this feature than ones with a lower credit score who are actively working to rebuild their credit?

You can only play games for so long.Chances are your next door neighbor is an IRS agent and turns you in when your tenants blocks their drive or some other random event disturbing your IRS neighbor.ADU catches fire and your insurance won't cover you, because it was an illegal and unpermitted structure.The city inspector told the last guy not to build or rent it, and is now pissed and wants to make an example of you and just red tags the whole property and no one can occupy for the next 1-2-3 years while you wait for a hearing.Then when you get the hearing, "staff" recommends you tear the whole structure down, and if you still want an ADU, you can apply for a permit and rebuild it.Your tenant quits paying rent and won't move out and you can't evict them, because there is no valid lease and they're just your "roommate".Probably a dozen other bad things can happen to you when you do stuff like this. 

I would like to tear down and rebuild the front house and rent it out I already confirmed with the city that the zoning is ok for the rebuild.

.: For context, I own two SFR:Find a reliable and affordable handymanPay an extra 5k down on my highest mortgage rate (8.5%)Rebuild cash reservesMax out 401k and ROTH IRAImprove my operational efficiency especially with bookkeeping.Goal is to eventually end up with one property for each kid to help them get started when they start family formation. 

Hello,One of my single family rentals that is outside of Atlanta, was heavily damage in a fire and most likely would require a full rebuild. 

Some lenders may also want to see law and ordinance coverage in your insurance and perhaps a rebuild letter from the city stating that the property could be rebuilt as a residential 4plex if destroyed. 

With a income of 100K you should be back on your feet quickly, assuming you understand how to live a frugal lifestyle and be investing in less than 5 years.Pay off all your debts, save money by living a super frugal lifestyle and rebuild your credit.