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.  

Supplement this far simpler entity approach by ensuring you have appropriate types and levels of insurance, you operate your business in a manner in which your conduct is not considered an exclusion in your policy, you work with licensed and insured vendors, you execute contracts with indemnification clauses with these same vendors/ require additional insured status &  maintain appropriate licensing and permits.

I'm not satisfied with not filing the rental in an LLC simply because it's more simple and might cost me an additional filing fee .

Would be great to reconfigure the lot lines on the two additional parcels so they'd both meet the minimum to build.

Do they value nicer finishes and design or is that additional cost lost on the typical tenant in that pocket?

Additionally, I have one savings account for reserves for all my properties, which I add to every month. 

If you do call them best case scenario you get the listing, sell their home and end up with some additional buyer clients that did not end up buying this particular house.

We have been working to be extremely conservative with our estimates but with this being our first go at this, any additional expertise is greatly appreciated! 

What I found was, yes it was nice have additional income, but each project seemed to always interfere.

Additionally, don’t overlook Memphis, which has great potential for rental investments as well.