The purchase is way too high relative to the rents (assuming $2500/mo/unit is market rent).

Two things 1-The tenants attorney sent a letter to the PM who forwarded the letter to me stating that the tenant wanted to remain in the property and feels that this clause has no merit for termination.2-if the claim that I put in under the regular policy insurance does not cover the damages.

A good attorney will help you cover all/most of the risks. 

One policy covers yourself (e.g. auto, primary home) AND your rentals.The umbrella policy provides liabiilty insurance OVER AND ABOVE a base policy. 

I'll only have to pay monthly rent and an option fee to move in, and I plan to find tenants and charge them a monthly rent that will cover my rent and allow me to live there for free.

This amounts to lost opportunity because if you had purchased RE, at the closing it can start producing return.5) ADUs detract from the existing structure whether this is privacy, a garage, or just yard space. 6) this is related to the value added by the ADU, but there are many more buyers looking to purchase homes for their family than there are RE investors looking to purchase small unit count properties.

One of the advantages to this is that you can save a lot on the permit fees relative to the ADU build if you're working with an existing structure.

Could I rent it out and use the LLC to help cover my liability?

I make at least enough money to pay for my health insurance each month but still have 98% of my time to myself!

I think the selling point for me in wholesaling is the ...relatively low risk and capital needed to begin.