Most seem to like there to be a business reason for the state you use to create the LLC, either the property is there or you live there. 

You can use a bank statement program, (1 year 1099) and depending on your schedule E or how you show your passive income or Schedule C depending on business tenure you can use just one.  

Hi Wendy,Coming from a Banker in most cases the Heloc is a Line of credit you only pay on the amount you use and a Heloan is the bank/lender gives you all cash.Lets say you borrow $10K as a heloc and in the first few months you take out $1500.00 your payment is only going to be based off the $1500 and not the $10K because the rest in the line of credit (LOC) not being used - Same as a credit card.

My biggest question is this: do you think I should continue to rent for now and prioritize tackling loans?

You've done well with your Class A rental, generating $500/mo in cash flow, this adds up over time.

This is a super important question and it doesn't just apply to lenders.

Quote from @Heather Luu: This brings me to another question.

This way the partner is getting paid more precisely for what they contribute.

Is this like LA metro where no one really uses metro line? 

I guess the idea is to use the equity from one property to purchase the second property, and so on.