Some investors look for cash flow and some look for appreciation and there are investors who need to merge the two in order for the deal to be considered good.I think identifying what sort of investor you are looking to become should be answered first. 

So, for police officers to investigate these sorts of things is complicated.

Over the past 24 months I've built two homes and renovated another, but I now realize I may have hurt my financial positioning by using all cash and not setting up some sort of LLC for these projects.

And, imaging having one in running it all and "poof" then there gone, holly-heck that's a nightmare right.

IF that is the case full stop - yes you are paying for something called insurance but if you have a claim the company has the right to pretty much deny coverage for having the wrong type of policy.Landlord policies are higher cost but for a reason - there is a different and increased level of risk when the house is not owner occupied.Talk with your agent and get all the details sorted out. 

I was thinking that if Memphis (and the sort) have cash flow but no appreciation...

I would love to talk to someone who has rented to college students before and sort of pick their brain.  

As far as the sale of a property with a mortgage on it, that all gets sorted out at close. ie, you bring your money, the bank gets what they have coming, the realtor gets what they have coming (if there's one involved) and the seller gets the rest.

Or are they performing some sort of arbitrage and they are not the end buyer.

His bank was in a state like Indiana, while one of his companies is in Wyoming, and just all sorts of weird sketchy stuff that accumulated over the period working with him.