You aren’t going to create them for privacy (the county tax records will make it obvious the previous owner moved them in to an LLC or trust.)You aren’t going to create them for liability because 1) you’re going to screw up and co-mingle funds piercing the corporate veil. 2) Anything that gets the property in the LLC sued is going to be your fault, so you’ll be sued as well. 3) you’re just going to buy an umbrella policy because you are 10X more likely to get sued for something you do than something the property does.

This amounts to lost opportunity because if you had purchased RE, at the closing it can start producing return. 5) ADUs detract from the existing structure whether this is privacy, a garage, or just yard space. 6) this is related to number 1, but there are many more buyers looking to purchase homes for their family than there are RE investors looking to purchase small unit count properties.

(Wyoming and Nevada, are popular for this)This still doesn't solve your "privacy issue" though, that would generally be done by holding title in a real estate privacy trust.

Egress, privacy and room for a bed are musts on a rental.

I have used sound machines in rooms and they work great, especially if you are renting by the room, it gives each person some privacy.

.#2 More Privacy for Tenants:With single-family homes and ADUs, tenants get the advantage of more privacy and independence compared to multifamily properties where tenants share common spaces.

On my first annual rental the property manager refused to share the completed rental application and screening reports with me, under the pretext or privacy, FCRA laws, etc.

If you are concerned about privacy then you should have created a land trust and make your out of State LLC the beneficiary of that trust. 

I ask a few questions such as:-Communication - were they responsive to emails and calls-Property care - any major issues / did they leave the property in good condition-Reason for leaving - this would give you more insight if there were issuesAnd always respect privacy if they are not willing to share.

There’s no privacy advantage any more with the new federal registration law, there’s no tax advantage, and there’s probably no liability advantage.