That doesn't hit the 1% rule and with CA taxes (that will go up after reno) you are sure to be cash flow negative each month, maybe by a lot.I see additional risks:$650k rehab budget sounds optimistic.

The exit strategy's for if the deal turns out to be a negative, a bust, and is draining your finances rather than adding to your pockets.

Well that was a pretty negative response lol, perhaps I can elaborate a bit.

We have a hard-core sellers market right now and I've been seeing properties fly off the MLS that are performing at around a 4 cap and have negative cashflow.

Trying to squeeze 5% more out of the property has a negative impact.

But feel it is going to negatively impact landlords by further scrutiny(and new regulations) from the government which will harm tenants on down the road.

If you are going to refinance anytime soon to pull enough cash to build the ADU, then quitting your job will negatively affect your Debt to Income ratio.

Rents were brought into line with neighborhood comparables and cash flow increased further when negative tenants were evicted.

While a theme is lovely, you want to avoid it feeling bare and lonely as those are negative emotions. 

If I were to HELOC or refi @ 75% LTV I would have a slight negative cash flow on the property.