@Matthew Forrest this is a new law for us here in CA so there is still some ambiguity in the process.The lenders we use are saying that they will lend based on the new income (as long as the ADUs are permitted) and essentially count the ADUs as normal units. 

Bank fees also matter, the #1 retail mortgage bank in the country advertises rates with about 2 points in junk fees ($10k in extra fees on a $500k loan on top of normal closing costs). 

I'm completely speculating here, but for example- they detected the presence of an underground septic tank in an area normally known for city sewer connections, and felt incapable of testing that specific component to their satisfaction. 

Is this normal?

-Current tenets do not have the best credit-tenets do not have 20% down payment-If I increased rent to the max $1250 i see them moving I would like to sell to the existing renters to reduce the sales fees and the head ache of having to list and move them out to paint, replace carpet, etc, plus they are really good peopleIm seeing my options as:1: Normal sale...and move them out(realtor said not to many investors in the area are paying $225k for a $1100 a month profit)2: offer to them and hope they can figure out traditional financing 3:?????

Deviate from your normal investment mindset - and start thinking creatively house you can get into the game by hacking your current living situation, or investment strategy.

You're not including repairs, CapEx, vacancy, or management in your rental analysis.Besides the normal condo caveats, I'd be worried that this is an appreciation-only play.

(normally recommended, especially if you are a landlord)- Water Backup: For water damage due to the backup of Sewers or Drains.- Personal Articles: Coverage for belongings that have a special or collectors valuesuch as Jewelery, Furs, Fine Arts, Collectibles, etc...Your age should not be a factor on the pricing but, depending on the company these other factors may get you credits:- Insurance Score (company pulls certain info out of your credit report)It is not your credit score but generally better credit will result in a better score- Time at your job- Education level- time at current residence" Good Luck

Also, if you have the cash and the deal is good enough, it might be worth it just to buy it with normal bank financing which is the easiest way to own it, with (usually) the lowest interest rate.  

I normally get down there a few times a year.