I had to present my documents for setting up the LLC and also my EIN number.

Fannie/Freddie both allow up to 90% financing. https://singlefamily.fanniemae.com/media/20786/displayHOWEVER, the  loan level pricing adjustments are HUGE on these loans: So, the rate and costs will be very high. 

I’d think long and hard about this and possibly set up financial parameters for who is responsible.

If I choose the rental, then all income generated will be taxable income moving forward, because none will be off-set by the interest I could deduct.  

Don’t worry about setting up an LLC right now.

Before making that move, consider other funding options like HELOCs, cash-out refis, or partnering with an investor to keep your retirement funds growing tax-free.If you're set on using retirement funds, explore self-directed IRAs, which allow real estate investments without triggering penalties.

Explore ways to optimize the current cash flow, such as adjusting rents or reconfiguring the property?

Two sets of eyes are better than one! 

DC has its own set of rules—often requiring a Basic Business License with endorsements for specific trades. 

Explore my personal favorites, Set For Life by Scott Trench or The Total Money Makeover by Dave Ramsey, for invaluable financial insights.3.