However, any FHA loan originated after Dec. 1, 1986 require the buyer (person assuming the loan) to go through a credit-worthiness assumption.  

Right now, ~$70k of Income and some debt reduction will go far to help your creditworthiness.

If I used a co-signer I would do the same check on them as your tenants to be sure they are credit worthy etc but I think I would request clarification on thee report first.  

Our tenants aren't exactly credit worthy so our rent is 100% cash, and that is not something I want to entrust to a management company. 

In either case you and your partner will be the responsible parties on the loans.You will have to wait for 6 month seasoning to get a new appraisal and get the loans based on that.Your ability to get either of these loans will depend on your experience, your personal credit worthiness and financials, property cash flow and your rate of acquisition.

Terms are really based on many things, the ability of the buyer/homeowner to pay it back, their credit worthiness, credit score, debt to income ratio, payment history of current debts, and job stability/pay.

So, figure that into your strategy.Remember that 5+ units is considered "commercial" property and financing depends on the building's income rather than yours, though your own credit-worthiness may still come into play.

Pre-approval means almost nothing - the lender has done a very basic check on your credit-worthiness and decided that based on the information you gave them, you qualify for the next step of a more in-depth credit check.

If we do this and once the renovations are complete, will mortgage companies look at the LLC's managing member's credit worthiness if we decided to do a cash out refinance?

And we hold the parents to the same income criteria, i.e. they can't combine with the kid to meet the guideline - the individual has to meet the guideline & credit worthiness.