But for now, this seems to be the solution for people in San Diego who want to create the extra cash flow that comes from an ADU, but can't afford to build an entirely new building.   

The plan did include a sample for flood zones that would have to be addressed and the plan did have a section with a solution from an engineering firm, so there is some conversation about this happening.  

As my GC says: "if it's stood straight and true for the last 100 years, it'll probably make it at least another 25".Don't get me wrong; there are plenty of issues/problems/quirks that old houses have that new houses don't, and an old house can obviously have hidden problems and big repair/maintenance bills too--which is why thorough due diligence is fundamental to REI...but, the point is: a new house is not a foolproof solution to repairs/maintenance headaches (and in some cases, a brand new house can be a much bigger gamble than an older house).Good luck out there!

It removes them from the grey area while allowing them the ability to offer more solutions to homeowners (cash offer, traditional listing etc.). 

Turnover averages over 5 years for these, so not sustainable as an "only" option, but is nice as an extra shot in the arm from time to time.

Wrapping the house and putting siding up was the solution and acceptable to all involved. 

A clear description of the issue and planned solution and documentation of it.

We need people who provide good, sustainable business models.  

The best opportunities require a solution to a problem that others haven't been able to solve.

Yes, their incentive is a little different that ours as the property owner, but it still may be an alternative for a more palatable solution.