Those were instrumental to my development and I recommend them all of the time!

When they buy these instruments it then puts money in the hands of the investors who in turn buy more overpriced assets to then dump back on the Fed.The Fed is keeping rates low and treasury is buying MBS, CMBS and Bonds which is keeping the real estate market flooded with liquidity.

Real estate experts are not mortgage experts; mortgages are legal instruments that are regulated by multiple federal agencies. 

We have a mix of ownership at the moment: 2 of them are owned by the LLC, the rest are titled to a single partner.We also have a mix of financial instruments at play: 3 of them titled to a single partner have a mortgage with a bank, 1 of the homes owned by the LLC has a private loan, and the last 1 owned by the LLC is all-cash at the moment.I'm less interested in asset protection from the LLC since we're using Umbrella insurance as our safety net.My main concern is filing taxes properly and accurately (attributing gains and losses to each partner correctly), especially since we started down only-LLC ownership and transitioned part way to personal-and-LLC ownership of our properties.

Once you're talking about very large properties there are agency lenders, bridge loans, mezzanine debt and a whole bunch of sophisticated financial instruments at play. 

What loan instruments are available for a paid off house?

A Mortgage(trust deed in some places) is the security instrument that secures the real estate as collateral, and it gets recorded (the Note doesn’t get recorded).

Otherwise, you could be reading through real estate documents, as well studying Common Law as it pertains to real estate, so that you understand how to do buys better, through legal instruments & so that you are on some kind of par with the attorney who helps you.

Or do they have some other highly liquid financial instrument they can use in these situations? 

I really like this area because of the job pull with company headquarters like State Farm and Texas Instruments, and because of the highly sought out public school districts in the area.