They will ask you to fill out 1-2 pieces of paper, and they will probably send you a 1099 at the end of the year, but that should not be a big concern usually.I try and help my tenants out whenever I can if they can get free money.  

Things such as a space to cook are high on that list (toilets are a big one, too).

(We were planning to move back to our rental and rent our primary due to higher rents so started to rehab the primary then found out insurance would not insure us due to the high fire risks if we changed so ended up rehabbing both houses and burned the savings).Our dilema is we don’t want to sell either of our current houses due to excellent locations and appreciation potential but want to progress with more rentals.

If your properties are finished better then the competition and you are priced within the market rental price even at the high end you should do well.  

Wow, was that a loaded question,  I have done just this to help the owner pull the trigger if the owner is a little bit low on funds for the labor end of the project. 

We are building an ADU in California and he was supposed to be done by end of April.

Depending on how much material or items you need there's always people selling excess material and items they ended up not using or needing, typically at a discount.

Needed some guidance on the fees for this kind of real estate and whether the offered pref and LP/GP split actually makes sense or is it too high/low?

That you wisely build in the costs for replacement linens and towels (also offer black face towels), possibly don't use high-end top-down shades in the Bunk Room (although those black out shades match all the shades in the rest of the house and it's a high-end property), chalk can be brushed, semi-gloss on walls for easier clean-up... and yes, there are clear check-out directions to run the dishwasher provided via an online guest book, a physical guest book, and an email I send regarding check-out the day before they check-out.

So having your budget some flexibility to redo some things if needed.I hope this helps you because it's not very difficult on your end you just need to choose things presented to you and decide if you like them or not.