I have an LLC structure, but I own a rental held in my personal name. 

I think the one DETACHED 2 bed 2 bath ADU that is being built off a converted garage + extension is perfectly OK and there is no question there.I think the grey area is around how you go about turning a 5 bed 3 bath existing living unit that is currently the downstairs of the main structure, into 2 2 bed 2 bath units, one of which is classified as a main unit and the other classified as a ATTACHED ADU.I have heard there are some rules disallowing converting existing living space into ADUs that may make this difficult.

Costs went up and revenues dipped or were stagnant due to increased supply. 

Awesome to hear how you have your structure set up @Shannon Mogilinski, it's quite obvious that you all are dialed in on your proccess - I love it!

There's lots of tax planning on this and I would suggest to take a professional opinion on how to structure a transaction in a way that you can make it into capital gain tax or reduce self-employment tax.

The structure of the transaction is much more important than is generally recognized.  

As Greg noted, there is a lot that I would want to be crystal clear on with how it is structured, how you can remove yourself, if needed, how you can change management or sell.

They said it is in a trust and structured so that it can't be sold until the owner's death? 

 @Chris SeveneyThe long-shot play I became aware of; Capital Improvement Project Funding that the city/county have allocated for projects that meet 2 criteria.Have a lifetime greater than 10 yearsCost more than $50,000I believe, even if the water and refuse collection run is only 1000 ft, that may not qualify but to do it "right", that two mile run would allow the entire subdivision to be supplied with services.

Perhaps you could form an LLC later on down the line to clean up the structure after some time.That way you'll be able to do clean 1031's with your new partner from property 2 --> property 3 ect.....