Although AB-968 doesn’t specifically mention “licensed” contractors, the state of California already stipulates that “anyone who contracts to perform work that is valued at $500 or more in combined labor and materials costs must hold a current, valid license from CSLB” (source: CSLB).With AB-968, if work is performed by an (un)licensed contractor in an amount that exceeds $500, disclosing that entity’s or individual’s name and contact information becomes a legal requirement.

However, some local jurisdictions may mandate it.Additionally, bedrooms must meet certain electrical outlet and lighting requirements, cannot have openings directly into a garage, and with some exceptions cannot contain gas appliances.

It is my understanding that you cannot use the ADU for short term rentals in Los Angeles.https://therealdeal.com/la/2019/10/29/while-you-were-sleeping-la-bans-granny-flats-as-airbnbs/If you make the ADU all electric (like I did on mine), then you don't need to worry about splitting the gas. 

@Alan Wolkov - I think your concern about finding buyers is a valid one.

That is a consideration.A greater consideration is that in order to do a valid 1031 exchange the tax payer for the old property must be the same as the tax payer for the new property. 

I do live close by to a school, hospital, grocery store, gas station.

Other STR related expenses such as electricity and gas are generally more investor friendly and bonus no sales tax in Oregon.- Distinguishably & Scarcity: One challenge (and opportunity) of investing in Oregon is healthy and happy properties.

Validate buyers.2.  

This can potentially enhance long-term wealth building.Tax Deferral-By reinvesting your proceeds into like-kind properties through a 1031 exchange, you can defer capital gains taxes, allowing you to reinvest more capital.Market Timing-Despite the competitive market, a 1031 exchange gives you a defined timeline to identify and acquire properties, potentially putting you ahead of other buyers who might not be as motivated by a tight deadline.Cons:Lower Initial Cash Flow-Acquiring additional properties may reduce your immediate cash flow, especially if properties in your target market are not as cash flow positive as your current property.Risk of Overpaying-In a competitive market, there's a risk of overpaying for properties just to meet the exchange deadline, which could impact your overall returns.Either one is a valid option, but overall it depends what your financial goals and restrictions are.

Even with only $1000 in rent I’m still over a 1 to 1 ratio (was not taking out a lot of equity) but under a 1.25 ratio. get a valid lease in place then refi ?