He buys nice homes (700k range and adds ADUs to them for around 100-120k) All in he's at 800k and he will generate between 6-7k/month in gross rent which usually nets him around 1k/month in true cash flow. 

During this time you are not generating any return from the money invested in the ADU.

Good advice from @Nathan Gesner and Account Closed Also bear in mind that if you can find a current deal that makes sense, and will generate even a decent amount of cash flow right now.....then you can just about count on it doing very well once you are able to refinance.

This opens to generational living, house hacking, guest house situation, or full investor.

Will me generating a lease for last year and then this year, calling out the space at home, be unethical or illegal in any way?

I was behind on being ready for retirement and was hoping the real estate, and having tenants sending me checks each month would help in generating cash flow and increasing net worth.

While he has helped millions become debt-free, which is amazing, I'd seriously challenge how many he's helped become wealthy though (his philosophy doesn't teach how to build generational wealth). 

I’m working with my father on managing his RE portfolio.We have one multi family property that is fully paid off and generates roughly $200k in NOI/Cash Flow.

To remove the rental income generated to me personally and have it towards an LLC. 

If you had a property that was treated as a rental and it was placed into service, you should list it on the tax return.Rental properties within the first couple years, as you stabilize the property, normally generate a tax loss on the return.Whether you can utilize the loss on your return, as it may be considered passive, is another discussion.