Considering moving, but we have no interest in losing this property - it’s unique and a great investment asset all things considered.I have no experience whatsoever with renting out a property.

NOT LEGAL ADVICE WHATSOEVER. 

Rental rates are fine for SFHs - I haven't had to drop my rates whatsoever with turnover, nor have I had a single tenant try to negotiate a lower rate. 

I am looking forward to connecting to people with similar goals and trading ideas and strategies.  

You will just be trading 6.4% for 7.5%~. why do that?? 

Will the renting of ADU rise to the level of trade or business? 

I could see this fit into several categories of 'real property trades or businesses.'

In construction your plans are your Bible, so you need to know how to locate any discrepencies, locate answers to questions froms trades, understanding "Take-offs" with your materials, and be able to visualize in a 3D space what the plans are describing.

Just say no.I would almost never do this trade unless all my downside, including potential unknowns, were completely compensated for. 

I didn't see anywhere that you posted what they said ARV was, or what you think it is based on comps...the County assessment has no bearing whatsoever on value.