Unfortunately, you must refinance the property completely with a new mortgage in order to pull equity out (or pursue a line of credit with a local bank). 

For example, I mention that every adult must pay a $30 application fee, pass my credit/criminal background, make a combined income of 3x the rent, and whether or not the property accepts pets.

If you can pull the equity out of the 3 plex with the HELOC, that's where I would start.  

As easy as this sounds, it's not simple and usually like pulling teeth.

Before you jump through the hoops and incur the transactional fees of transferring this duplex titled to yourself and wife to an LLC can you articulate the liability exposure risks you believe could impact your personal assets?

Since I am not buying a distressed house, I couldn't pull my equity out by refinancing.

In January of 2014 he filed an annual report and paid his annual fees.

They do say they have a one time fee for debt collection and I suppose negative reporting with a 30 day delay and dispute process. 

If you sell the property (regardless of whom to), you will pay all the fees and transfer taxes associated with that sale - likely thousands of dollars.  

Without a hours-long conversation, here are things I consider.1) I have never invested with anyone that charges an acquisition fee, and most syndicators charge an acquisition fee.