This avoids the time and expense of filing and complying with the save harbor Regulation D filings, although by relying on the general exemption for private offering rather than a Reg D filing you do give up your statutory defenses in a case where you are sued by your investors, for example should something go wrong and your investors lose money and decide to sue you.

Make sure that complies with your state laws. 

Have you checked local zoning laws to make sure boarding house concept complies?

You hired them ~ If they fail to comply, start interviewing new PM's.

So identifying a potential property for a given strategy will need to be investigated carefully.When moving in the speculation mode, understand what the proceedure is in your area for special use permits and who you may need to obtain permission from or better said, who may object, because there will be objections.Also, changing the use of a property will most likely kill any grandfathered protections from current code compliance, which can be very expensive to comply with in an older building.Next, I'd check the existing utility services.

Taxes- NAME, LLC. complies with any and all necessary state and federal tax obligations and uses CPA Accountants in CITY, STATE for the preparation of all tax related documents.

It requires more admin work from the PM to verify income and make sure you're always in compliance and there are inspections and standards you have to comply with for the life of the loan. 

I tend to comply with the rules... and sleep better at night.

Would a homeowner ultimately have to sue a city like Redlands if its ADU ordinance doesn’t comply with the new state standard? 

Residential leases don't often include a provision for estoppels (any good commercial lease will), so even getting the tenants to comply and fill one out may be tough.