The seller's LLC pays capital gains tax and depreciation recapture, while the buyer's LLC uses the purchase price as the new cost basis.

It's a good practice to overestimate costs and underestimate after-repair values (ARV) to keep your expectations realistic.

What are the pros and cons of each, and which offers the least restrictions, flexibility and cost savings for my intended purposes?

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

I think there is a common misunderstanding that licensed contractors cost more.

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

. :) A zoning change can take up to 6 months, approval isn't guaranteed (despite Aldermanic support), and potentially cost a lot of money (architectural site / floor plans & dimensioned elevations, zoning attorney, holding costs, etc.) 

I want to know is it more cost effective or easier to purchase the property alone and put it in a mortgage in our name or purchase the LLC from him that holds the property within it.

To save those costs, you might want to stick to some year build and older, for example, if you cannot do inspections on the properties that you are buying due to off-market deals or something else that is hindering you (all sellers I buy from do not want anyone in the home till we close).

Considering opportunity cost of not affording more rentals vs paying much more in interest.