moving it to an LLC will not do much for you in the way of asset protection OR taxes (double check that with a cpa, everyone's tax picture is different). most people lean towards the LLC thing for legal protection, but a single-member LLC is a thin veil that's easily pierced. you'd be paying LLC fees & paying another LLC tax return prep fee, for what i'd say is nothing. if you do want to transfer the deed to an LLC anyway, you'd do a 'quit claim deed' with a title company or real estate attorney. if the mortgage lender ever says something you'll just give them proof that it's a single-member LLC and the one member is you (the original borrower). 

So I have a flex space in one of the units of my duplex that can easily be turned into a 3rd bedroom.

I used to find it easily by typing any combination of words BP, Tokyo +Meetup.

What the benefits for the seller are is that they CAN foreclose almost as easily as a bank if need be; there is a good chance that they can get a better rate on that Note that they will carry (say 5-10%) than what they are likely to get with their equity otherwise; if might help them sell a property that is hard to sell otherwise; and might be advantages income tax wise also.One example is a 4plex that just came online here in our market.

the answer i'm giving is based on the assumption that you do not want to / can not float the negative cashflow any longer. and note: even if appreciation / debt paydown / tax benefits strongly outweighed the negative cashflow, most investors wouldn't want to / couldn't float that. so that said, i say SELL. you have just over a million dollars in equity (minus transactional costs when you sell), and you could do a 1031 exchange into a ~4 million dollar CASHFLOWING property. i invest long distance into value-add multifamily on the west side of chicago. gearing up for my next deal right now. in that price range you could easily get a value-add multifamily with potential to cashflow 15k/mo+++ (up to 40k/mo) once it reaches its full potential. it sounds like you're in markets that are probably strong for appreciation and weak for cashflow (with the long term rental strategy). if cashflow is your goal, 1031 into value-add multifamily in a higher-cashflow area. don't let having to pay commissions during the sale stop you. you're already losing so much annually; you have to stop the bleeding at some point. also note that right now, with the way these two properties are losing money, that might negatively affect your borrowing power when you go to buy the family home. feel free to dm me if i can help in any way!

.- I could easily put down a cash down payment and given my wages in Los Angeles, if need be, pay the mortgage when it is not being rented.- What are the potential problems other than not being there in person 24/7?

My last CPA charged me 10k for a service that I could have easily gotten for 3k.

My market is Durham, NC and I'm sure many cities have intricacies that out of state investors could easily miss.

The trust part can be hard b/c you're not able to check on the properties as easily but that's part of building long term business relationships.  

Just make sure they allow rentals and that you can sell it easily if that ever should change.