I did that last year to show drainage problems, pool/pool deck/driveway failures, water intrusion inside, wood rot, original finishes on interior...  

Home was listed for 50k with only a picture of the front of the home.I have learned when there is no interior pics it usually means its in bad shape.

The property has a small 522 sq foot SFR that is designated as an HPOZ contributor, and our client is looking to build a new modular home about twice the size on the large lot and convert the existing SFR into the ADU. 

You can factor in about $50 per month per unit for both.Based on the numbers, seems to be a good deal but needs to verify the cap rate for the area and you can get that from a good real estate agent specializing in multifamily.The $77K cash infusion to increase occupancy, I am assuming will be spent on improving the interior finishes of the units.

To date, I have laid new flooring, upgraded both kitchen and the bathroom, and will finish painting interior and exterior.

The only reasons I can think of why someone would do this is A: They realized they are way over budget and are heading for a loss, they want to recoup their investment and move on, leaving someone else to deal with it. or B: they are catering to designer investors who just want to put their finishing touches and design on the property without having to the nasty demo work and such. 

They are hugely different in many, many ways.Learn the big three:1 - Market Analysis2 - How Money Works3 - Learn what is, and how to design and stay with, your REI plan.I hate to tell you this, but most of the statements you've made are backwards. 

Lots of experience and analysis has to go into that decision and even then the highest and best use does not often match up with the current or future designated land use plan for the city or the county. if that's the case you then have to look at what WOULD the city or county approve for zoning and the site plan and figure out highest and best use with return for those parameters.    

The online courses are less designed to help you know all things real estate and more designed to make sure you know the laws around what you can and can't do as an agent. 

Different designations mean different things around the country.