(We have lease option agreement for 23 years, after I pay off the loan he would transfer me the deed to the property. ) Also, I would assume I would put trustee under my name?

I would assume they want some money out of it.2.

@Jimmy Ready You should assume the rent on both units.

We're due for a correction any time..A good rule of thumb is to assume your property--even a well-maintained one--will consume 30-45% of rents in expenses: taxes, insurance, maintenance. 

I don't know how well you know your market, but I am assuming you aren't ignorant and know where the good, bad and decent areas to live in are.

Basically, you know what you've invested into the home as I assume it is complete?

I've checked county tax records and this second building is included in the record, so I'm assuming it's legitimate.

Assuming our DTI allows it, we can pull out $200K and maintain an 80% LTV on the property.We've known this whole time that this property was worth it, but this kind of outside validation feels amazing.

Repairs, are what depend on being "placed in service".So ultimately, (you assume no liability here for tax advice) best practice is to itemize receipts so that at the end of the year, it's easy to determine what was a repair and what was an improvement.Currently I have a lump sum figure, not itemized.  

Assuming your numbers are correct the property is not good cash flow for a rental even using San Diego's low rent to value expectations.