File a complaint with whatever agency in your state regulates mortgage originators (presuming this person is licensed or registered, which you can check on the NMLS Consumer site).

I know based on IRS rules I can't get the same benefits as the funds, but I can still invest the funds capital as long as I abide by all regulations.

You won't believe how expensive they can get to build and then there are a lot regulations that go with them as well.

If you want the definitive answer on CA ADU regulations email ADU @ the HCD domain (BP does not allow email addresses but you can figure out).  

Right after we purchased our triplex, they passed the first round of regulation requiring permits and a set of rules to follow (January 2019). 

@Da Shiek WoodardI would suggest that you purchase a multi-family property (as your primary residence) that you would be comfortable living in for one to three years (depending on your mortgage companies rules and regulations).

Is it federal or regulated by state?

@Dave Foster I was planning on doing a 1031 but I do need to familiarize myself with these more, I'm not sure of all of the specifics and regulations.

I thought part of their charter/purpose was to ensure local jurisdictions abide by the ADU regulations. 

. - Managed internal and external client communication adhering to deadlines and compliance regulations.