For reserves, some lenders want 6+ months. 

Your question has been debated between BP tax experts both privately and publicly, for example here: https://www.biggerpockets.com/forums/51/topics/819991-expens...And we ended up where we started: no consensus and no clarity.There have also been court decisions that support my interpretation, even though I personally find these court decisions debatable.

The only reason I got an LLC was to buy a commercial property because it was a requirement of the lender.

HUD does not factor into the rent other amenities that might be included in the rent such as garage, basement, fieplace, central air, pool etc, that might command higher rent in the non-Section 8 market place. 

I was also going to ask if you'll have access to the property - many lenders will require an appraisal.

If you announce to people there that you are a private lender, you'll have a lineup around the room to talk to you.  

As a would be individual landlord with just a one unit single family property I don’t know I can stomach the risk or withstand a financial assault resulting from an eviction process for a non-paying tenant (or tenants that do extensive damage).I am seriously considering bowing out and selling.

Quote from @Patricia Steiner: There are several lenders who offer low/no closing cost options for first time homebuyers.

By reducing the principal balance, your lender recalculates your monthly payment based on the new, lower balance.How Does Mortgage Recasting Work?

Building an ADU is a nice way to add value but you won't get that funded by a lender.