I was told by my closer today that she cannot Quit Claim the Deed into an LLC, but said it would have to be a warranty deed because they cannot prepare as the under writers came down on title companies as it is seen as practicing law.  

This could make first time buyers vulnerable many issues like inspection issues and just bad real estate practices.

It's best practice to remove them, spruce the place up, and put in new tenants at market rate that have been screened and approved by you.

The Arizona Department of Real Estate (ADRE) receives numerous calls and complaints from the public and real estate professionals related to the practice of unlicensed activity and wholesaling.Specifically and over the past few years, the practice of wholesaling property has generated complaints about deceptive sales tactics, predatory contracts and clouding title to properties.

In practice, separate entities should be separate.

I practiced in front of a mirror and my family for days.

I suspect an Bk attorney would advise you that you don't qualify for a BK.I suggest you consult with a very good real property attorney, preferably one who practices in the area the property, or better yet the foreclosure Trustee is located. 

If a legal issue arises with Property 1, only that property’s assets would be at risk, protecting the equity in Property 2 and any other properties you may own.Asset Isolation: Isolating each property in its own LLC helps protect your assets from creditors or lawsuits targeting a specific property, thereby providing a more robust legal shield.Financial Management and Bookkeeping:Regarding your concern about financial management and the practicality of handling multiple LLCs:Centralized Banking: Using a holding company’s business account and credit card can simplify your bookkeeping.

Does anyone know how it works and best practices?

We frequently hear investors chasing properties that meet the "1% rule" which in my opinion is a  flawed underwriting practice (have posted on that very subject a few times in these forums), but in order to achieve a 14% cap rate your Gross Operating Income must nearly meet 2% of the assets cost assuming your operating expense ratio is at 35% (which is very lean on operating expenses).