But sounds like LLC and / or living trust provides better protection in the event of a law suit.  

My plan is to purchase a house with an in-law suite (or a basement with the roof height to convert to an in-law suite), live in the suite, and rent the top.  

@Georges ArnaoutEquity = LLC.No Equity =  keep Private ownership.I've heard Buyers will purchase a property in their own names for favorable financing then transfer ownership to an LLC for anonymity and protection from frivolous lawsuits.

It's not like they don't know who and what, their issue is investigating with "cause" and what is suggested or even admitted to on the internet doesn't meet "just cause".But, when a complaint is filed, watch out, and what was said may then be applicable.I assure you, your law suit case will be followed by criminal action.Entrapment is another issue for regulators, they can and do pose "undercover" but they don't post on the internet, doesn't mean they aren't here.  

(The income tax is in violation of Washington State law, and will embroil Seattle in lawsuits for the next decade, but that does not concern Ms Sawant.)  

2.What do you do to ensure that the tenant is responsible for security deposit disputes since that is the largest reason for landlord lawsuits?

Source SFH deals that have an in-law suite, finished basement, or ADU that can be rented out as STR on Airbnb.

If a tenant is building a case for a lawsuit, you will become the "proud owner" of that lawsuit.Regardless, @David Benton is correct, the LLC had no impact on the taxes.

If one of them fall out, injures or kills someone, there'll be a lawsuit.

Quiet Title Lawsuit, if uncontested and no additional problems maybe 4-6 months and $2,000.