It is a legitimate dwelling as its metered separately and has its own address.

A guesthouse shall not: +5(1) Provide more parking than the one required space; +5(2) Be advertised for occupancy through any print or electronic media or through placement of signs on the property; +5(3) Provide separate mail service or have a separate address from the primary dwelling unit; or +5(4) Be separately metered for utilities. +5

I explain that on my condo, house and accessory dwelling unit alone here in Los Angeles will net approximately $100,000/year with 3% appreciation in 30 years.   

If you wait to rent your first dwelling for after you move out, that is when you open business and manage the property.

Besides this option, are you also open for a house hack (finish of a basement, Accessory dwell unit, mother-in-law, .....)If you are open for the two options, you will have more houses to choose from.Always open to more conversation over phone or coffee if that's helpful!

We weren't registered with hpd (private dwelling). 

Your policy may say that any coverage is excluded for and dwelling or addition that does not meet code requirements.

Don't spend too much time dwelling on the "unknown" and prepare for the what-if's.  

Expected use is the key, if you  have 5 acres or even 10 and that area is generally single family dwellings on similar parcels, it can then be  considered for residential development. 

BakersfieldR2 = One unit per 2500 sqftR3 = One unit per 1500 sqftKern County R2 = One unit per 2750 sqft Side setbacks are as little as 5 feetBack yard setbacks range from 10-15 ft 10 feet between building on the same lot Parking requirements are the most important to keep in mind since parking takes up lots of space; on space for studio and 1 bed, 2 spaces for any dwelling unit 2 bed and above with at least one ADA space for the propertyHope that helps