One of the main issue my guys dealt with and I suspect that has not changed but it was theft and vandalism..

My apartment is identical to non-hotel-apartments in the same building, but was classified as a hotel apartment upon purchase by the owner.

If you want your LLC to be respected for liability purposes, it should have an operating agreement, bank account (so an EIN) (this will also require disclosures to the bank on your identity), and for you to full respect it as a separate entity from yourself. 

This is extremely common in areas of C D quality properties.. not necessarily the tenant that did it could be just your typical theft when a home goes vacant. this is why its critical to have a vacant home policy in force on your rentals..

I am open to an alternative solution but they seem like they using intimidation tactic via email like call my strategy theft (something I take offense to) and that they will not pay and I should figure out the impossible.

A Creative Finance Lawsuit can be brought by the Attorney General, the DOJ, FDIC, and on and on among others because it involves banks, wire transfers, possible fraud, possible identity theft, possible equity skimming, possible violations of the Consumer Protection Act, Dodd-Frank, ACT S.A.F.E.

I think you are mistaking  fake foreclosures with the commercials we hear about for title theft.

Some things that might be a concern:1) Obviously have to make sure things are all permitted first2) I don't want the room to "feel" like an addition, so flooring has to be same level/standardized with the rest of the house3) Unlike the rest of the house that has an identically-shaped 2200sqft basement underneath, this added space will not have a basement directly underneath it -- I'm not sure if this poses major cons for some reason that I'm not aware of4) Especially given the lack of basement underneath, I have to make sure that the HVAC can still somehow be piped into this room#2 and #3 are probably my biggest concerns (#1 and #4 I can find out relatively easily)Any tips/thoughts or other experience would be greatly appreciated. 

Failure to maintain the separate identities of the companies.3.

Fines, theft, fires, drug overdoses, collapse ceilings it never stopped.