If they are struggling then money they spend in one area affects their ability to pay other bills like rent.

Legitimate, in this case, means that the entity is part of an overall business investment strategy whereby you have a business plan, tax returns, and the funds you seek are for further business expansion.If, however, the LLC is a stand alone entity, is not profitable, or is not legitimate, then your probably better off putting into your personal name and securing funding that way, or still talking to local or regional banks to see if they have any loan programs available where you might be able to secure financing.

Do you plan to live there forever?

Here are the numbers:$30k - avg monthly income3 options for rent vs buying$12.5k - avg monthly payment (20% down) on $2mil home$6.25k - avg monthly rent on $2mil home$6.25k - avg monthly payment (71.5% down) on $2mil home3 options for return on capital:7% - avg yearly return on 71.5% down payment (assuming 5% avg yearly appreciation in SD)10% - avg yearly return on from S&P 500>10% - avg yearly return on investment property (just an assumption, but I think you are all here because you beat the stock market)First, the $12.5k monthly is very intimidating and beyond what I should be spending on shelter (a no-go for me)

Finally, check with the Town to make sure there are no municipal liens, Make sure they're on Town sewer, check with the tax assessor to see how many bedrooms the tax office thinks there are, (important if you are flipping) buy ok to have more bedrooms if you are planning to buy and hold.  

do you plan to live in that property?

To simplify the existing lease I thought about asking the tenant if they would be ok modifying the addendums to get rid of the resident benefit package and the building protection plan. 

There's a specific forum for House Hacking.You'll want to spend some time reading through there as it's a common topic.

I’m planning to purchase some land and build a small 12x12 cabin.

You are going to get conflicting responses on this because a lot of it comes down to your plans and your tolerance for risk, which are things known only to you.