Any advice on managing this situation, reducing costs, or navigating the permit process would be greatly appreciated.

We dealt with similar scenario gave each family member named in the will $2k and the trustee $10k and it was ours. 

I would be investing my in multi families.

Investment Info:Single-family residence buy & hold investment.

Family Deal, very carefully.

Are you looking into single family homes only, small multi families etc., how much cash do you have to deploy and what is your price range to purchase, do you want to invest locally or at a distance, what ROI are you looking to get on your investments and does the inventory in your market support that, are you looking for turn key or are you trying to force equity into the property, are you looking to house hack or are you doing a 20% down and rent it out right away. 

I manage over 100 STR and MTR properties (STR is not allowed currently for ADU's, but MTR is, and great way to maximize the income, unless you're using it for family or office purposes.)I recently constructed an ADU in the backyard of a property within the city from a detached garage.

I’m personally more comfortable with SFR or a 4 plex vs a 50+ multi family. 

Because they want the repeat business and referrals from your friends and family.

@Braeden CobbEven small value-add projects done in real estate specifically referring to multi-family properties can help out significantly in investment returns by boosting them.