If you have 20-25 % down and good credit you should be able to do a debt service ratio loan.

Now, I'm not used to that - in my world (acquisitions), you identify a property, complete due diligence, arrange debt/equity and 60-90 days later the asset is yours.

This would put it around $120-140K in ARV based on comps within the last 30 days.Current market rental rates for this property are in the range of $1100-1300 per month.Gross expenses are currently at~$850/ month, including debt, insurance, taxes @ 4.75% rate. 

If you assume that your non-debt related expenses are 45%, that leave you with $1100 for debt service and profit (if any).

The question is: When it is time for the tenant to finally pay, does the tenant pay us (the new owners), or the old owner whom the debt accumulated under?

They have a strong W2 income to support taking on debt. 

I recently got completely out of debt....no debt at all!

Suppose the member who owes the debt is a member in five LLC's.

Or if you all think I'm completely wrong and just paying down debt and holding (what I believe is) post tax money in the operating account is just peachy.  

Residential only if you have the DTI to handle a million in debt.