Make sure you have copies of the leases and applications, and that you get the security deposits transferred over to you at closing, and the rents collected for the closing months should also be prorated and credited to you.  

My question for you is about forming an LLC and transfering title of a property into that LLC.

However, they include "bad boy" carve-outs that trigger full recourse if the borrower commits certain bad acts like fraud or voluntary bankruptcy filing.Abandonment may constitute default: If the GP abandons or surrenders control of the property during foreclosure, it could be considered an unpermitted transfer that violates the loan agreement and triggers the guarantor's full recourse liability for the unpaid loan balance.

Transferring property ownership to an LLC also comes with legal and tax implications.

And I also wasn’t sure if it was a good idea to transfer the house into the LLC also once it was formed.

If you are setting aside funds for capex, taxes, insurance, or other expenses that don't occur monthly, transfer those funds to Savings each month and hold them there until it's time to spend them.

The mortgage & re industry does not want to see seller finances and the banks don't want to see their loans that they underwrote transferred.

Now he is saying that it's a "second home" mortgage (higher interest rate) because she won't be living there (but if I buy in MD, we still have to pay the state transfer tax because I have owned in MD before.)

Do I create an LLC to own the property and use a quit claim deed to transfer ownership?

@Jacob PalmerTaking over tenants in a duplex means you must honor lease agreements, transfer security deposits, and provide proper notice.