My questions are around taxation - i have read that if the rental is not associated with a us trade or business, then the gross income from the rental is taxed at 30%, however if associated with a us trade or business, then graduated rates apply, as well as the net is taxed and not the gross.

This immediately struck me as odd as I wasn't aware of any form of compensation to the PM for any maintenance related activities, just 8% of gross rent and 1-month of rent to lease the property, per our contract.Naturally I wanted to understand the nature of this arrangement, specifically how much mark-up is being charged, so I referenced a specific sewer repair bill from 2015 that was $2,600 and asked him if he could provide the vendor invoice so I could understand how much the vendor charged and how much revenue the PM recognized.  

Let's assume you don't take a loan.Purchase Price: $1,299,999Closing Costs: $25,000Renovate unit: $35,000Build 2 ADUs: $250,000TOTAL: $1,601,000The cashflow calculation looks like this:Gross existing rent: $5,600Gross rent from 4th unit: $2,500Gross rent from ADUs: $3,000TOTAL GROSS RENT: $11,10020% Expense Ratio: -$2,220Property tax: -$1,354TOTAL EXPENSES: -$3,574NET CASHFLOW: $7,526So, about 3/4 of your $2M budget gets you to about 3/4 of your $10,000/month goal.

California charges a minimum tax of $800 a year per LLC, and more if you have gross receipts in excess of $250k.

@Evan LoaderTexas does not have a separate individual income tax filing.Kentucky and Georgia may have a tax filing requirement based on a minimum net income/gross income threshold.Even if you are not required to file, you may want to consider filing - to roll over potential NOL's.Furthermore, a filing doesn't necessarily mean you have to pay a tax - i depends on what the income from the K-1 reports.

We will operate the ADU as a short-term rental and that will get us to financial freedom.The Detroit rentals gross over $16,500/mo in rents with a bit more than half of that being net cash flow.

My PITI is $1,180/mo and each unit is rented for $1,200 for $2,400 in gross rents.

And at same time, it's understood that depending on what you do to convert those assets who do nothing alone, into something that generates $$$$, that the overall value/worth of that enterprise will be based upon how efficiently it generates revenue and converts gross revenue to net profit. 

My annual gross income is $156,000.

If I was going to invest in such an area it would be at very low or no leverage levels, such that there would be a large delta between my gross rental income and my net operating expenses including capex, vacancies and reserve set-aside.