That brought their original quote of $572k down to $530k which is still a substantial gap from the potential $427.5k ($390k+$30k roof+$7.5k solar panel) of the friend's shop.Any thoughts or recommendations on which way I should go for the construction bid? 

Provides cash flow, and the value usually increases and gives a substantial return on investment.

If you're going to CC for both, discuss it first, see if they have any concerns and keep your leads pristine and well organized, some leads are difficult to come by and take substantial effort to acquire.

. $300/month x 3 units = $900/month x 12 months = $10800 yearly profit.EX2: If finding a property in the Tax Delinquent Data Base, like I do, and using the $38000 as a down payment in a 1031 tax deferred exchange, then there is the significant potential that a 10 unit could be gotten with substantially more rental income and bringing Zach that much closer to his financial end goal. $300/month x 10 units = $3000/month = $36000/year profit, In addition, Zach would not need a property manager in Washington State as this would be his opportunity to learn the property management business so that when he moves in 3 years Zach is knowledgeable about how to operate a complex and understand how to oversee a manager from a distance.

But this is a pretty small investment, and paying a substantial CPA filing fee could wipe out any potential gain I get from this investment and then some!

But you will need a substantial down payment in any case.

Phase 1 results can be (1) property has no limited environmental impact, no need to go further, (2) property has some environmental impact , needs Phase 2 or Phase 3, or (3) substantial environmental problems, either reject deal or find out what it will take to mitigate and adjust price for HUGE discount.Environmental Insurance Policies have been pushed as a panacea for above problems.

Does the ADU add substantial value to the property and is the rental income return acceptable?

I do not want rent my house substantially below the market but I am afraid increasing rent too much will drive my tenants away.

This form establishes the passive activity loss generated in the current year, the amount carried forward from the prior year, the amount used in the current year, and the amount carried forward to next year.Any amount carried forward is generally available to offset passive income from passive activities in future years.If the carryovers are large and increasing every year, you'll want to keep the K-1s that generated the losses as part of your substantiation requirements (and not purge them after 3 or 6 years).