The cost would be about 500k about $250k cheaper than it would be to buy another duplex property in my area.

The landlord should be named on the tenant's insurance policy for additional protection and to assist with tracking compliance.

Quote from @Zara Massoud: Hi, The PM company we signed on has a clause to add them as 'additional insured'.

Additionally, I would like to attempt to do the process Owner/Builder with subcontracting work out as well as doing some of the work I'm comfortable with (I have some experience with bathroom & kitchen remodeling an am not new to the construction industry).

If you sell a property, and do a 1031 exchange with the proceeds, but don't need all the proceeds for the down payment of the next property, are you taxed on the additional profit that isn't part of the exchange?

My goal is to leverage that equity for additional income.

I can send a million articles, but i encourage you to go to maricopa.gov in addition to the city websites where you will see all the development going on here at a micro level. 

This initial negative equity position consumes the initial cash flow.  2) the addition of the adu makes the property multi family and likely makes rent control apply.  

My budget is in the $200-250K range.Please feel free to let me know if additional details would help, and thank you in advance for your time and advice! 

Additionally, the house is 25 years old and could use cosmetic updates to increase rental appeal.