This home was in a less than desirable neighborhood.

Or look for less desirable areas with lower prices with higher cash flow potential?

Worse house on a very desirable neighborhood.   

Looking back, I'm sure this was a part of the reason they had no sense of urgency or desire to leave within the 3 week timeline we gave them.

It is still a strong seller's market in the Bay Area, people over pay a ton to get what their heart desires.

I know it has at least a 10k foundation issue...but it's a good piece of land in a desirable neighborhood with a silly growth curve (major teaching hospital being built nearby).

The one big negative is that the barrier to entry is getting high compared to less desirable areas of the country which I believe is the main reason some Coloradoans are investing in less expensive markets as mentioned.

If you want to create a life you desire then do what is necessary to make it happen even if that is going against the grain. 

Pro's A:) It would generate higher rental income being a 2 bedroom2) Convert the ADU into a 1 bedroom / 1 bathPro's A) Cost less for construction Pro's B) By doing so, I can keep the garage door and devote a portion of the garage as a storage area to the front/main unit which will make the front unit more desirable and command a higher rental income from the front unit since a lot of tenants seek having storage/garage space from my personal experiencePro's C) By making the ADU a 1 bedroom instead of 2, the back unit will likely be rented out by a single individual as opposed to a family.

It’s my estimate or desired return.