finishing a basement is completely different than adding a bedroom below grade level.Simplest thing to do is go talk to the AHJ (authority having jurisdiction) / building department.

I am asking this just to get a base line as to your expectation management, are you looking for the cheapest around?

Most insurance companies offer both a Basic and Special policy form option.Some of the coverages you mentioned, may be ancillary products with different names.

If you have plenty of experience, you can easily acquire deals or teach.If you have plenty of capital, you can fund deals or lend.If you enjoy fixing up properties, you can fill that role as a contractor/flipper.If you don't mind holding liability for a venture, you can own that risk as project manager of a venture.If you live in a good market, you could be the local boots on the ground.So at a basic level, decide if you have the time, experience, capital.

California's is not that bad and has a base rate, inflation rate and cap.

Other versions could be far simpler, such as a basement apartment, for example.

Can't speak for other areas but we are able to command more than market rent for a basement studio with all utilities included.

And you would be overvaluing the 1,800sf by just doing a basic $/sf calculation, without taking that into account.    ..... 

When ROI drops below what can be earned in a basic income fund (10%) it is no longer a worth while investment.

Finding homes with a basement apartment or mother-in-law suite comes with another set.