I would guess a dwelling would be no more than a 3/4" pipe from the main to the house.

It’s designed to instantly reflect where you are at financially.keep in mind I’m not any sort of expert, but just know from my own experiences.  

@Colleen F. that's a slippery slope. when a property manager has 500 or 5000 units, there's no way to be in instant contact with a tenant.

Hi Chris,Yes, you're correct that, to protect the physical dwelling and anything pertaining to the ownership of the property, a commercial policy would be the best fit as the commercial renters policy is not designed to protect that (it protects the renters' interests at the location like contents, liability, files and records, etc.) depending on the individual coverages therein.

But I also have never been so broke and looking at another 2-3 years before I can buy my next one, and a instant $100k in exchange for cutting my cash flow by more then half doesn't sound too bad to me.

I will be adding an ADU (additional dwelling unit) to my property for rental income. 

One thing to consider when purchasing 2-4 unit multifamily here in San Diego and Properties with Accessory Dwelling Units (ADUs) is that financing starts to become problematic having a certain number of unpermitted units or ADUs..For example in that triplex you @Ben Capone mention, if there are 2 additional units which are unpermitted or even if the units are permitted as ADUs, there is a good chance that an appraiser may call it a 5 unit  multifamily property which would require commercial financing and residential financing would completely be out of the question....in alot of these scenarios, the investor is then forced to back out of the deal as commercial financing is a whole different beast than residential (1-4 units) and typically requires more than 25% down here in San Diego.

However, most Insurance companies will not write a Homeowners for a Non-Owner Occupied dwelling.  

If your parents have $3K in capital losses in the stock market to offset this gain, there will not be any capital gain to tax.Given that your parents' purchasse price was $180K, and assuming that 25% of the purchase price is allocated to the land, the depreciation basis for the dwelling structure becomes $135K, with an annual depreciation allowance of about $4910. 

How are you not minimizing your vacancy already... you should have a max 1 week vacancy.Raise the rent, if they can't afford it, they can put in their 30 day notice.As part of the contract, you can enter the dwelling to show it to prospective tenants.