Personally I feel he earned it that’s his money.

You don't get that from a random person you don't know well.

If I book a room that will work for two people (i.e. with two beds) but only book for one person would we be able to change the reservation later to be able to share the room?

Since the DADU is on the same property as my primary residence, can I place the DADU in an LLC, separate from my primary residence, to protect my personal assets from liability?

This is a lender and personal question.Lenders look at your monthly Debt-to-Income Ratio.

In a better market you might be able to use those things to get a better deal on commercial insurance but in the current market there won't be flexibility.On personal policies/1-4 unit rental dwelling policies there won't be any flexibility whatsoever unless it's something the company already has built into their guidelines/pricing.

Recommendation letters would be fine as well, but personally, I think talking to them over the phone is more ideal as it's easier to get answers and just a better understanding of the tenant. 

Then visit the lender website and see if the have an REO section or try to find a person's name.

If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing.

Basic recommendations- Deed of Trust-Personal Guarantee-Promissory note-JV agreement (to protect the lender from violating usury laws)-clear late fee schedule, cure period agreement-cross collateral if the subject property doesn't safely cover you with enough equity