I think most places are in this range

If I would not consider fighting this, it means few people would.I hope you knew this could happen as part of your due diligence when adding the JADU  Good luckThank you because it validates exactly what we were thinking. 

Just thinking out loud...

This means if your friend offers $500k in “cash” for a property the appraisers think is worth $400k.

(I think the real ratio is about 50 bad ones to 1 good one!)    

Deed the property into a land trust OWNED BY the LLC.This will provide anonymity, which is critical to protection simply because it is very difficult for someone to sue you without knowing exactly what you own. 

If you are legitimately trying to start a real estate business, I couldn't think of worse advice to give you.

Quote from @Russell Brazil: So why do you think your tenant is telling the truth, .....

These were not our top 2 priorities but we're in the process of doing our due diligence and knowing all of the major and minor things people think we should look at will help us make sure we don't miss anything. 

I don't think it's a bad guess, but I also wouldn't expect that to be realized with an investment horizon of less than 5-7 years.