Or is only an LLC sufficient?

This was not easy when I was still employed but I knew what I wanted so I made it happen at the cost of sleep and the regular things most people do with spare time.

I lost no sleep over that.Sometimes you just have to find your model and not veer from it.  

They 5 are: Character (reliability, integrity), Capacity (sufficient income or cash flow to service the debt), Capital (the borrower's net worth or how much of their own money they put into the deal), Collateral (the value of the assets that secure the debt), and Conditions (the borrower's situation and the state of the economy or local real estate market).

I can't sleep at night thinking of all the interest being flushed down the drain on a balloon note.

The idea that a vacant house has enough equity in it for you (or in your case an investor) to purchase it, paying off the mortgage/mortgages and any an all liens and still have sufficient equity in it makes no sense.  

In couple years we are looking to purchase a house, would it be sufficient for our landlord to provide a letter to our future lender that we paid on time?

Specifically, they will be looking for capital for a down payment and operating expenses and reserves, capability to obtain financing in an amount sufficient to close the deal.  

Lenders in this space tend to create their own form docs in order to sufficiently protect themselves.Title company has a certain set of docs, this usually pertains only to the Title Policy on the property. 

Would the properties need to be free and clear in order for the 1031 to execute or is simply owning, say, 10 turnkeys at $100k each sufficient enough to 1031 then purchase a larger MFH.