It has been very difficult finding a home in that price range that makes sense for me to use as a rental after analyzing the numbers, at least in my area.

I see it as two different ways of calculating this:1. considered personal use days when not booked method: 200 rental use days / (200 rental use days + 165 personal use days) = 55% and multiply that by 25% (sq ft) = 14% prorationOR2. no personal days for dedicated unit method: 200 rental use days / (200 rental use days + 0 personal use days) = 100% multiplied by 25% = 25% prorationSince the ADU is solely for renting and is never used personally I would think method 2 makes sense?

This implies that an RE investor in San Diego must find other means to profit for a purchase of an SFR to make sense. 

Just make sure the numbers make sense on the investment and that you can pay it all back.

Numbers-wise, it doesn't really make sense but it is an area where you can count on long-term appreciation, just not sure it's worth the headache. 

And I sense you are not the type that will waste anyone's time when sharing your strengths and weaknesses. 

But I was only asking if it makes financial sense to do for ROI

Sorry, if this does not make any sense.

For example, we have seen multiple instances of C-Corps set up that made no sense when one looks at the clients' financials, returns, businesses & goals. 

I would start with asking why they want to rent if they have been owning - does their answer make sense?