I would always build into your budget some wiggle room for unseen problems that could occur to be safe until you have a few underneath your belt.Hope this helped!

I just don't want to accidently commit a crime.

If a refinance were to occur that returned a significant portion of equity, the additional interest expense would be a drag on the cash flow, so in all likelihood the distributable cash would be significantly less than in your example post-refi.Bearing in mind points 1 and 2, in a real-world example the additional promote cash to the sponsor would be a significantly smaller delta than your math here suggests. 

We heard that it would be better to form a LLC company to hold the assets so that accident will not impact all assets.

The original house was built about 100 years ago and there were some additions and updating that occurred throughout the years.

If it occurs it’s a bonus.  

. - and what happens if those things occur. 

If there is accidental damage less than $1000 it is a better conversation to have with the guest when we can say "Don't worry about it, accidents happen and this is covered by the damage waiver fee that you paid" than to try to collect the expense from them to cover the damage.Since we started collecting this non-refundable fee we've never had any accidental damage that exceeded $1000....$300 is the most we've had (a broken TV).

(What they said happened vs what actually occurred). 

This is like paying for car insurance then getting in an accident where your insurer pays as normal and then after your insurer goes after you for payment. 2.