In some cases, it may not be possible to purchase and store materials, but if it is, that is one way to protect your budget and avoid a costly mistake.The last thing I would offer for you to think about is having a pivot plan. 

  (2) Variable cost: platform fees from Airbnb and VRBO, lodging/hotel/transit or whatever pass-through tax your local AHJ requires, cleaning fee, cost of replacement for consumables, repair and maintenance, etc. 

A professional property manager should handle the heavy lifting, ensuring your investment is protected and profitable without adding stress to your plate.

This could turn a potential loss into positive cash flow while protecting your property’s value.

When its included in a lease for real estate then the laws pertaining to residential rental security deposits in your state apply but when its separate you should have more leeway to get some additional deposit to protect you.

@Ryan Daniel  I will preface this with the fact that I have a legal background, specifically with estate planning and asset protection in relation to real estate investments.

(If you are out of state, you may seriously consider using a good property manager because of screening tenants, vandalism, squatting, and various other reasons -- they do protect your investment).

This initial negative equity position consumes the initial cash flow.  2) the addition of the adu makes the property multi family and likely makes rent control apply.  

It was a small $$$ project but time consuming because that was something I DIY'd while living in the property. 

As for the property structure, using an LLC offers liability protection, while a land trust provides privacy.