Your Comment: "Because it is so difficult many choose not to jump through the hoops to do"That is a "difference without a distinction".

That is a distinction I could understand, but then I'd be on the hunt for where that is spelled out by the IRS, tax court, or other pronouncement.In any event, I appreciate you reading my post and responding. 

Jamie its up to the company  the reason most want you to own it in an LLC is to make the distinction between owner occuppied / purpose  and investor / investment purpose.. there is different disclosures and laws relating to them depending on title.

The second appraiser did not use the same "distinct marketability" approach but instead simply went a little further out geographically to get more comps.

The distinction would be if the income would not be used at the purchase of the property, lenders on traditional products will not use the income from legal units, because that income can not be relied on. 

@Aaron White There are a lot of lenders out there that can lend on these types of scenarios. 1-4 units are in your single family home and 5+ is when you get into the multi-family with regard to distinction for loans. 

@curtdavis : could you name the reason/s why this type of buying model is almost distinct?  

The Tax Court has recognized that the several series of an investment fund may be considered distinct taxable entities.

That is what makes them a semi-attractive option, because the distinction of having to owner occupy makes it less valuable and limits your flexibility/buyer's pool but you don't have the whole hassle of complying with commercial code.

Generally speaking, at least in the state of Virginia, such accounts must be kept entirely separate and distinct.