I assume this is because there is the assumption that there will parties and disregard for the property? 

BTW, yes cap rate on a small MFR is typically disregarded. 

Single member LLCs are totally disregarded for Federal income tax purposes, so normally the so the IRS would have no interest in them.

That is his modus operandi in any eviction scenario to sell or re-lease with total disregard to the first option.

And if the LLC you set up is a disregarded entity (meaning taxed as a sole proprietor and not filing it's own tax return) then all activity of the property is still on your personal tax return. 

The only thing with disregarded entity is that your self employment taxes will be higher from what I read.I am the Sole owner of the LLC. 

If it is owned by just you and you will not have any employees (likely) then it will likely be a disregarded entity--no need to file a separate tax return or obtain an EIN.  

The potential buyer could just disregard the split of that lease option contract or rental agreement and say "nah, I'm only going to pay at a 10 cap with NOI computed solely through lot rent based on market rents."

@Lindsey Leemis a 1031 from your personal name into a disregarded LLC is technically still the same taxpayer. 

If you own the current property(ies) in your individual name and then transfer to an LLC, it would not affect future 1031 exchanges, as long as you are the sole member of the LLC and the LLC is a "disregarded entity" for tax purposes.When you do an exchange, the underlying taxpayer for the sale needs to remian the underlying taxpayer on the purchase.Therefore, for tax purposes, Dean I. = Dean I., LLC (as long as you are the sole member and the LLC is a disregarded entity).