Small upgrades are paint, door knobs, sometimes floors, updated light fixtures.

With a 2 bedroom unit located on the first floor and a 4 bedroom unit on the second and third floors.

Yes, I replaced all of the old carpeting with new carpeting or other flooring materials.

The top floor, with access to the garage will generate $2,600/m + utilities and the suite will generate $1,600 + utilities.$4,200 total income-$500/ property tax-$200/m insurance-$150/m maintenance-$100/m city utilities (water/sewer)-$210/m 5% vacancy (even 5% is overkill)-$2,500/m mortgage ($700k @ 2%)=$540/m cashflow - Even if you wanted to have a property manager at 10% the property would still be cashflow positive.This property only generates 0.47% of the purchase price per month (nowhere near the 1% rule) but still cashflows. 

rezoning is not feasible, it's very costly. if it's zoning a 2 unit then you are in a so called pre-existing non-conforming, check the floor area ratio if you are already over then there is not much you can do, however if you your FAR is below then there are potential opportunities for the garden unit considering the newly passed ordinance. 

Need to go conventional with MANUFACTURED home (double wide after 1976) The county or city may restrict the type of foundation: pier, auger, blocks, concrete BUT it must be permanent.

Yeah but that urine is a heck of a lot harder to get out of the flooring : ) 

The test consists of 10 random samples within the house including vinyl flooring, popcorn ceilings, wall texture (not drywall), pipe insulation, and and attic insulation.  

So they only counted the top floor minus the garage.

Even though it is cosmetic work, most municipalities in CA will want a permit for everything except floors and paint...