In most cases, if the units are separately metered, the tenants can and typically do pay for all their own utilities.

I'm considering purchasing two older single family homes that have separate addresses but are on the same lot and same tax and water bill.

What about separate metering?

Your clients will have a separate auto policy and if you only write the home there's a real good chance you will lose the account within the next 5 years as they will want to bundle the two together to receive discounts.   

You're purchase and sale are on two different calendar and two different tax years (satisfying at least two tax court rulings) and separating them on two consecutive tax returns.3.

Are they on their own separate parcel?

Rent out the House part and the mother-in-law suite separately (could also be a short term rental). 3.

Can you survey the property and have the property split up to basically make two separate properties and insure the good house?

As such, you may not create a transaction where there is any direct or indirect benefit in either direction between yourself (or a LLC you own, which is still you) and your 401(k).While there is theory that you and your plan can "very separately joint-venture" into a transaction, it would be very easy for the IRS to find holes in your transaction that create some form of benefit. 

Purchase price: $214,000 Cash invested: $3,500 Took a single family home and converted basement into separate unit.