My second problem is the switch for the lights in the front room are in the common Foyer.

What do you feel about 10% down by the second closer?

Try to update the electrical and plumbing on your unit and then the second unit above you.

I Think we are missing the point What @Erik Whiting is doing is not BRRR even in the imaginary scenario, because the second R is refinancing, and he said he doesn't want to leverage, so for Erick, a Better investment would be index funds that average an 8% return.

If the house main panel has 1 60 amp breaker to feed the second unit you just put the meter in line right after the breaker .Now in this situation you would keep the electric in your name , read both meters and do the math .

Second is to buy the minimal thing that meets your needs. 

In the first case I'm left with $8k the second I have $4.8k.

It is.So your small structure might not be economically reasonable.If you do decide to build an actual second dwelling, I recommend reaching out to @Josh Braun of Torque Development.

I'm asking this question for my father who is looking to be a private investor for real estate projects. 

On the personal finances, buying my first BRRRR side of things:  My wife and I are within 10 days of closing on a refi of our house in order to wipe out the divorce legal and settlement debt I racked up on second mortgage and credit cards back in 2014 and cut $800-1000 out of our monthly obligations.