And because our judgement was so big, a contingent collection agency was willing to take our case for $1,000 retainer and 30% of the recovered funds.  

That's not going to happen if you walk into their office and tell them your closing on a sale tomorrow.Once you reach a point where your financing is locked in and contingencies cleared, you should request the PM to send a letter of introduction for the new Owner/PM to any occupied units so they are not taken by surprise when someone new comes knocking on their door.

With the contingencies the remainder of the amount is paid by check!!!! 

So, since I got all glowing recommendations from references and everything looked clean, I told these people they were approved contingent upon no surprises coming when I received his background check back.

I do not think that the property will get appraised appropriately therefore I can still get out of the deal  with the appraisal contingency. 

Cash offerBuy paid closing costHouse “as is” Waving contingencies$500 earnest money Close as quick as possible Just want help with the contract so I don’t mess up, Any solid advise for a first timer would be great!

Account for contingencies in your rehab budget ALWAYS.

I would do your best guess budget of what it would cost to do BOTH the ADU and the Main Home upgrades - and then add 20% contingency, and then ALSO calculate your carrying costs on the loan(s) over the period of time you think it's going to take.

Basically you will make an offer contingent on the sale of your current home. 

This is a matter for your CPA, since it contingent on your personal status, but something to consider if there is significant benefits to you, or if you will essentially be carrying over most of your losses anyways.And the most important piece that I remind myself, and Jack made clear at the end of his post: investing, to me, should be focused on the fundamentals of the investment, with the tax benefits being the icing.