Make him sign a contract,include the clauses above, make him sign a release of lien form as soon as you hand him the check, make him warranty his stuff contractually for a year.Anyone willing to do that will more than likely do just fine.

Researching revenue and costs for pro-forma sheets....finding property tax and insurance are much higher in Houston than other cities--is my information good?

This likely means the cost will be more than expected and the pro forma will not be accurate.Sum it up and there are many better RE investments than adding and ADU. 

Should we form a LLC first before we start looking for properties?

There are a ton of calculators where you can run a pro forma to see your yearly return.

Should I form a LLC and start everything related thru it or should I aquire a few properties first keeping it "ordinary"?

When this happened….ExxonMobil Merger en.wikipedia.org/wiki/ExxonMobilWikipedia In 1998, Exxon and Mobil signed a US$73.7 billion definitive agreement to merge and form a new company called Exxon Mobil Corp., the largest company on the planet.

I am thinking of weather operating my llc that I am about to form as owned by just me or include my wife as partner.

We do plan to form a LLC, but not sure how many properties can have under LLC.As for the 2 investment rental properties, we plan to buy with cash and finance our live-in home.Thank you in advance for your advice.

And a pro-forma showing the type of properties you'd like to buy.