If the second property you are buying is not turnkey, will require some work, and there is a clear value/range of what you can bring the property to by adding value then you can refinance to pay back the majority if not all of your HELOC (used for downpayment or to buy the property completely).You'll need to know how to analyze an after repair value of the property to figure out if that technique can work or not.

It's better to refinance and pull capital out than to sell and acquire.

Here are my main concerns:Cash flow concerns: Based on my current mortgage and projected rent, I'd be looking at negative cash flow unless I refinance in a few years.

I plan to to rent it for 3500 when the time comes (first floor with basement)We are currently looking for our next multi family but just need to figure out the best route forward for financing the purchase.Use our own money, tap into the equity here, refinance here out of our FHA to roll into another one at our new property, go the Fanny Mae route with the 5% down Multi Family home loan program. 

If so then moving it to the LLC is not a big deal, but if you have a mortgage, then you might trigger the due on sale clause which will require a refinance and possibly more down depending on equity.It sounds like you might have overcomplicated the situation but operating as an LLC but holding the property yourselves vs in the LLC.I have never seen that kind of situation before.

It was enough of a difference that I might choose to refinance the loan.

You could do so much better building a team to buy ugly houses, rehab them, rent, refinance and repeat.

There is risk in the model, if they decide to change laws, for example.If you buy with short term, will you be able to refinance or sell with the same income stream.

I would first start with a few lenders to understand your options for taking out the equity in your existing properties - likely either a Home Equity Loan or Refinance.

Keep the money and use it to refinance later.