For example, I require cosigners to have a 680 credit score and they must have enough discretionary income to cover the rent they are promising to cover.I have a separate Cosigner Agreement that they sign.

Now, we are 1 month strong and counting in renting out the top 2 bedrooms on airbnb, with us living in the bottom half (completely separate) - here's how it's going so far:Guests Stayed: 15Reviews: 5 stars, 8 reviews, super hostOccupancy: We had 3 nights of where 1 bedroom wasn't rented.

Back when I was in the acquisition side at a large apt holding firm, every property was in a separate LLC, and when I spoke to investors there (Nebraska) it seemed like small and large investors kept everything in LLCs as well.Not sure if it is just state by state or what, because I always thought that was the way you did things as an investor. 

These are generally very emotional situations for the owner that lost it.

This separation should be well-documented to maintain their classification as passive activities.

Just open a separate bank account, give it a business name and keep track of all income and expenses.

In my primary I have two tenants living in separate building structure. you could still cash flow in bay area if you have SF with 5-6 BR or have multiple building structure.

I've gotten a couple quotes and and it's around $350K to add an ADU for any investor (separate detached unit on same lot).

Assuming this is an investment property, keeping track of your expenses and income in a separate bank account (not personal) and ideally holding the property in an LLC 

I guess, all the trust issues and emotional instability could be settled with extra deal protection.